Cost Production Report
The following data for the Packaging Department for March are available:
Units: Packaging Department
Beginning WIP-Units 10,000
Started in production 80,000
Transferred out 75,000
Ending WIP Units- 15,000
Beginning WIP- % complete 40%
Ending WIP- % complete 80%
Beginning WIP- transferred in costs $3,000
Beginning WIP- materials costs ---
Beginning WIP-Conversion costs $1,630
Transferred-in costs $9,600
Direct materials- Packaging $21,000
Direct labor $ 8,470
Manufacturing overhead $ 7,300
Total conversion costs $15,770
Ben Hiebert, president of Hiebert Chocolate, Ltd, is trying to determine whether to use a weighted-average or FIFO product costing system, since Hiebert's contract with Wal-Mart allows for a sales price of cost per department + 15%.
1. Consider only the Packaging Department data. Prepare cost of production reports using both weighted-average and FIFO process costing.
2. Which method should Heibert use and why?
The solution is provided in excel format using cell references to show calculations. The solution shows, step-by-step, how to calculate the equivalent units as well as costs assigned to such units under both the weighted average and FIFO methods.