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17-36 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 cat- egory (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 depart- ment for October 2017 are as follows: Physical Units (Car Seats) Direct Conversion Materials $1,250,000 Costs $ 402,750 Work in process, October 1° Started during October 2017 Completed during October 2017 Work in process, October 31 Total costs added during October 2017 5,000 20,000 22,500 2,500 $4,500,000 $2,337,500

17-36 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 cat- egory (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 depart- ment for October 2017 are as follows: Physical Units (Car Seats) Direct Conversion Materials $1,250,000 Costs $ 402,750 Work in process, October 1° Started during October 2017 Completed during October 2017 Work in process, October 31 Total costs added during October 2017 5,000 20,000 22,500 2,500 $4,500,000 $2,337,500

Practical Management Science
Practical Management Science
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ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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17-36 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 cat- egory (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 depart- ment for October 2017 are as follows: Physical Units (Car Seats) Direct Conversion Materials $1,250,000 Costs $ 402,750 Work in process, October 1 Started during October 2017 Completed during October 2017 Work in process, October 31b Total costs added during October 2017 5,000 20,000 22,500 2,500 $4,500,000 $2,337,500 "Degree of completion: direct materials,?%; conversion costs, 60%. Degree of completion: direct materials,?%; conversion costs, 70%. 1. For each cost category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule. 2. What issues should the manager focus on when reviewing the equivalent units calculation? 3. For each cost category, summarize total assembly department costs for October 2017 and calculate the cost per equivalent unit. 4. Assign costs to units completed and transferred out and to units in ending work in process. 17-38 FIFO method (continuation of 17-36). 1. Do Problem 17-36 using the FIFO method of process costing. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the FIFO method. 2. Should Larsen's managers choose the weighted-average method or the FIFO method? Explain briefly.
Transcribed Image Text:17-36 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 cat- egory (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 depart- ment for October 2017 are as follows: Physical Units (Car Seats) Direct Conversion Materials $1,250,000 Costs $ 402,750 Work in process, October 1 Started during October 2017 Completed during October 2017 Work in process, October 31b Total costs added during October 2017 5,000 20,000 22,500 2,500 $4,500,000 $2,337,500 "Degree of completion: direct materials,?%; conversion costs, 60%. Degree of completion: direct materials,?%; conversion costs, 70%. 1. For each cost category, compute equivalent units in the assembly department. Show physical units in the first column of your schedule. 2. What issues should the manager focus on when reviewing the equivalent units calculation? 3. For each cost category, summarize total assembly department costs for October 2017 and calculate the cost per equivalent unit. 4. Assign costs to units completed and transferred out and to units in ending work in process. 17-38 FIFO method (continuation of 17-36). 1. Do Problem 17-36 using the FIFO method of process costing. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the FIFO method. 2. Should Larsen's managers choose the weighted-average method or the FIFO method? Explain briefly.
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