weighted-average and FIFO process costing

Case 1. Hiebert Chocolate, Ltd., is located in Memphis. The company prepares gift boxes of chocolates for private parties and corporate promotions. Each order contains a pre-determined selection of ch
Case 1. Hiebert Chocolate, Ltd., is located in Memphis. The company prepares gift boxes of chocolates for private parties and corporate promotions. Each order contains a pre-determined selection of chocolates that are distributed and sold by various retail stores. The chocolate gift boxes are made in a three stage production process: Mixing, Drying, and Packaging. In the Mixing Department, chocolate is melted and mixed with other ingredients. The Drying Department takes the melted mixture, forms it into various shapes, and dries the chocolates. The Packaging Department takes the dried chocolates and boxes them, just before they are sent to finished goods. Accordingly, Hiebert uses a process costing system.
One of Hiebert’s largest customers is Wal-Mart. This organization purchases roughly 80% of all Hiebert’s products following data for the Packaging Department for March are available:
Units: Pkg. Dept.
Beginning WIP-Units 10,000
Started in production 80,000
Transferred out 75,000
Ending WIP-Units 15,000
Beginning WIP-% complete 40%
Ending WIP-% complete 80%
Costs:
Beginning WIP-Transferred-in costs $3,000
Beginning WIP-Materials costs ——-
Beginning WIP-Conversion costs $1,630
Transferred-in costs 9,600
Direct materials-Packaging 21,000
Conversion costs:
Direct labor 8,470
Manufacturing overhead 7,300
Total conversion costs 15,770
Ben 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%.
Requirements
1. 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?