Question

In: Statistics and Probability

Weighted-average method. Larsen Company manufactures car seats in its San Antonio plant.

Weighted-average method. 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 2009 are:

 

Physical Units (Car Seats) 5,000 20,000 22,500 2,500 Conversion Direct Materials Costs S 402,750 Work in process, Octobe

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 2009 and calculate the cost per equivalent unit

3. Assign total costs to units completed and transferred out and to units in ending work inprocess.

Solutions

Expert Solution

Weighted-average method

1.         

Since direct materials are added at the beginning of the assembly process, the units in this department must be 100% complete with respect to direct materials. Solution Exhibit 17-30A shows equivalent units of work done to date:

 

Direct materials                       25,000 equivalent units

Conversion costs                     24,250 equivalent units

 

2. & 3.             

Solution Exhibit 17-30B summarizes the total Assembly Department costs for October 2009, calculates cost per equivalent unit of work done to dateand assigns these costs to units completed (and transferred out) and to units in ending work in process using the weighted-average method.

 

SOLUTION EXHIBIT 17-30A

Steps 1 and 2: Summarize Output in Physical Units and Compute Output in Equivalent Units; Weighted-Average Method of Process Costing, Assembly Department of Larsen Company, for October 2009..

 

SOLUTION EXHIBIT 17-30B

Steps 3, 4, and 5: Summarize Total Costs to Account For, Compute Cost per Equivalent Unit, and Assign Total Costs to Units Completed and to Units in Ending Work in Process;

 

Weighted-Average Method of Process Costing, Assembly Department of Larsen Company, for October 2009.

 

*Equivalent units completed and transferred out from Solution Exhibit 17-30A, Step 2.

Equivalent units in work in process, ending from Solution Exhibit 17-30A, Step 2.


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