The problem below using the FIFO method of process costing. Explain any difference between the cost per equivalent unit in the assembly dep. under the weighted avg method and the FIFO method.
Larson Corp. manufactures car seats in its Sarnia 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 Larson Corp. 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. Larson Corp. uses the weighted average method of process costing. Data for the assembly department for October 2010 are:
- physical units(car seats) direct materials conversion cots
- work in process, oct 1 + 5,000 $1,250,000 $402,750
- started during oct 2010 20,000
- completed during oct 2010 22,500
- Work in process, oct 2010 * 2,500
- Total costs added during oct 2010 $4,500,000 $2,337,500
- +degree of completion: DM:,?% ; CC:,60%
- *degree of completion: DM:,?% ; CC:, 70%
1. For each cost category, compute equivalent units of work done in oct 2010 in the assembly dep. show physical units in the first column of your schedule.
2. for each cost category, summaries total assembly dep. costs for oct 2010 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.