Question - 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 departments 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 Oct 2012 are as follows:
Physical Units (car Seats) Transferred in Costs Direct Materials Conversion Costs
Work in process, October 1 (a) 7,500 2,932,500 - 835,460
Transferred in during October 2012?
Completed during October 201226,300
Work in process, October 31 (b) 3,700
Total costs added during October 20127,717,500 9,704,700 3,955,900
a. Degree of completion; transferred in costs ?%; direct materials ?%; conversion costs, 70%
b. Degree of completion; transferred in costs ?%; direct materials ?%; conversion costs, 60%
1. What is the percentage of completed 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 costs 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 and 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.