Suppose that Hoffman Company uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to under the FIFO method are that total transferred-in costs of beginning work in process on October 1 are $2,879,000 (instead of $2,931,000) and that total transferred-in costs added during October are $9,048,000 (instead of $8,094,000). Using the FIFO process-costing method, complete Problem. Hoffman Company, as you know, is a manufacturer of car seats. Each car seat passes through the assembly department and testing department. This problem focuses on the testing department. Direct materials are added when the testing department process is 90% complete. Conversion costs are added evenly during the testing department’s process. As work in assembly is completed, each unit is immediately transferred to testing. As each unit is completed in testing, it is immediately transferred to Finished Goods. Hoffman Company uses the weighted-average method of process costing. Data for the testing department for October 2017 are as follows:
Physical Units Transferred Direct Conversion
(Car Seats) In Costs Materials Costs
Work in process, October 1ª 5,500 $2,931,000 $0 $499,790
Transferred in during October 2017 29,800
Completed during October 2017 1,700
Work in process, October 31 $8,094,000 $10,877,000 $4,696,260
Total costs added during October 2017
"Degree of completion: transferred-in costs,?%; direct materials,?%; conversion costs, 65%.
"Degree of completion: transferred-in costs,?%; direct materials,?%; conversion costs, 45%.