WEIGHTED-AVERAGE METHOD Larsen Company manufactures car seats in its San Antonio plant. Each car seat passes through the assembly department and the…

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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 2014 are as follows:

Physical Units (Car Seats)

Direct Materials

Conversion Costs

Work-in-process, October 1 *a

5,000

$1,250,000

$402,750

Started during October

20,000

Completed during October

22,500

Work-in-process, October 31 *b

2,500

Total costs added during October

$4,500,000

$2,337,500

*a Degree of completion: direct materials,?%; conversion costs, 60%.

*b 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 2018 and calculate the cost per equivalent unit.4.       Assign costs to units completed and transferred out and to units in ending work in process.5.   prepare set of summarized journal entries for all October 2018 transactions affecting Work in Process— Assembly. Set up a T- account for Work in Process— Assembly and post your entries to it.

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