Chapter 17, Problem 17.42P

FIFO method (continuation of 17-41).

1. 1. Complete Problem 17-41 using the FIFO method of process costing.

    Required

1. 2. If you did Problem 17-41, explain any difference between the cost of work completed and transferred out and the cost of ending work in process in the assembly department under the weighted-average method and the FIFO method. Should McKnight’s managers choose the weighted-average method or the FIFO method? Explain briefly.

17-41 Weighted-average method. McKnight Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: the assembly department and the finishing department. This problem focuses on the assembly department. The process-costing system at McKnight has a single direct-cost category (direct materials) and a single indirect-cost category (conversion costs). Direct materials are added when the assembly department process is 10% complete. Conversion costs are added evenly during the assembly department’s process.

McKnight uses the weighted-average method of process costing. Consider the following data for the assembly department in April 2017:

^a Degree of completion: direct materials, 100%; conversion costs, 40%.

^b Degree of completion: direct materials, 100%; conversion costs, 15%.

1. 1. Summarize the total assembly department costs for April 2017, and assign them to units completed (and transferred out) and to units in ending work in process.

    Required

1. 2. What issues should a manager focus on when reviewing the equivalent units calculation?