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Optional Process

Larsen Company manufactures car seats in its San Antonio plant. The problem focuses on the assembly department, which adds direct materials at the beginning of the process and conversion costs evenly throughout. When assembly is finished, each car seat is transferred to the testing department. Larsen uses a weighted-average process costing method. Data is provided for units started and completed in assembly, costs of direct materials and conversion costs, and beginning and ending work in process for October.

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Fitri Yani Rossa Safira
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894 views1 page

Optional Process

Larsen Company manufactures car seats in its San Antonio plant. The problem focuses on the assembly department, which adds direct materials at the beginning of the process and conversion costs evenly throughout. When assembly is finished, each car seat is transferred to the testing department. Larsen uses a weighted-average process costing method. Data is provided for units started and completed in assembly, costs of direct materials and conversion costs, and beginning and ending work in process for October.

Uploaded by

Fitri Yani Rossa Safira
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Larsen Company manufactures car seats in its San Antonio 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 Larsen 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.

Larsen Company uses the weighted-average method of process costing. Data for the assembly department
for October 2012 are as follows:

1. For each cost category, compute equivalent units in the assembly department. Show physical units
in the first column of your schedule.
2. For each cost category, summarize total assembly department costs for October 2012 and calculate
the cost per equivalent unit.
3. Assign total costs to units completed and transferred out and to units in ending work in process.
4. Prepare a set of summarized journal entries for all October 2012 transactions affecting Work in
Process—Assembly. Set up a T-account for Work in Process—Assembly and post your entries to
it.

Larsen 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.
Larsen Company uses the weighted-average method of process costing. Data for the testing department
for October 2012 are as follows:

1. What is the percentage of completion for (a) transferred-in costs and direct materials in beginning
work-in-process inventory, and (b) transferred-in costs and direct materials in ending work-in-
process inventory?
2. For each cost category, compute equivalent units in the testing department. Show physical units
in the first column of your schedule.
3. For each cost category, summarize total testing department costs for October 2012, calculate the
cost per equivalent unit, and assign total costs to units completed (and transferred out) and to units
in ending work in process.
4. Prepare journal entries for October transfers from the assembly department to the testing
department and from the testing department to Finished Goods.

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