ACC – Hiebert Chocolate, Ltd

| December 5, 2017

Introduction:There are two methods of preparing cost of production reports, the weighted-average costing method and the FIFO method. In this assignment, you will work within groups to prepare a cost of production report using both of the methods. In addition, you will identify the appropriate method and reasons for choosing that method for a specific type of business.Cost Production ReportThe following data for the Packaging Department for March are available:Units: Packaging DepartmentBeginning WIP-Units 10,000Started in production 80,000Transferred out 75,000Ending WIP Units- 15,000Beginning WIP- % complete 40%Ending WIP- % complete 80%Costs:Beginning WIP- transferred in costs $3,000Beginning WIP- materials costs —Beginning WIP-Conversion costs $1,630Transferred-in costs $9,600Direct materials- Packaging $21,000Conversion costs:Direct labor $ 8,470Manufacturing overhead $ 7,300Total conversion costs $15,770Ben 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%.Requirements1. 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?

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