Question

17-36 Weighted-average method. Hoffman Company manufactures car seats in its Boise plant. Each car seat passes...

17-36 Weighted-average method. Hoffman Company manufactures car seats in its Boise 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 weighted-average method of process costing. Data for the assembly department for October 2017 are as follows:
Required
a. Degree of completion: direct materials,?%; conversion costs, 45%. b. Degree of completion: direct materials,?%; conversion costs, 65%.
Physical Units (Car Seats)
Direct Materials
Conversion 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
1. For each cost category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule.

In exercise 36P of chapter 17 in Horngren's Cost Accounting. How do I determine the equivalent units without the % of direct materials being given? Do I assume 100% or is there a way to calculate it?

Solution:

As question already says "Direct materials are added at the beginning of the process" it means direct material is 100% complete in computation of equivalent unit.

 Hoffman Company Computatio of Equivalent units Particulars Physical Units Equivalent units Material Conversion Work in Process, beginning 4000 Started during the current period 22500 Total units to account for 26500 Units accounted for: Unit completed & Transferred out 26000 26000 26000 Closing WIP: 500 Material (100%) 500 Conversion (65%) 325 Equivalent units of production 26500 26500 26325

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