question archive Company manufactures car seats in its plant

Company manufactures car seats in its plant

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Company manufactures car seats in its plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. The?process-costing system at

Hoffman

Company has a single? direct-cost category? (direct materials) and a single? indirect-cost category? (conversion costs). Direct materials are added at the beginning of the process. Conversion costs are added evenly during the process. When the assembly department finishes work on each car? seat, it is immediately transferred to testing. Hoffman Company uses the FIFO method of process costing.

 

Physical Units

Direct

Conversion

 

(Car Seats)

Materials

Costs

Work in? process, October 1a

4,000

$1,248,000

$241,650  

Started during October 2017

22,500

   

Completed during October 2017

26,000

   

Work in? process, October 31b

500

   

Total costs added during October 2017

 

$4,635,000

$2,575,125  

aDegree of? completion: direct? materials, ?%; conversion?costs, 45?%.

bDegree of? completion: direct? materials, ?%; conversion?costs, 65?%.

 

Direct

Conversion

   

Materials

Costs

Costs incurred to date

$5,883,000

$2,816,775

Divide by equivalent units of work done to date

26,500

26,325

Cost per equivalent unit for work done to date

$222

$107

   

Total

Direct

Conversion

   

Production Costs

Materials

Costs

Completed and transferred out

$8,554,000

$5,772,000

$2,782,000

Work in process, ending

145,775

111,000

34,775

Total costs accounted for

$8,699,775

$5,883,000

$2,816,775

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