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Larsen Company inventory manufacturer

Larsen Company 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 Department's 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 FIFO method of process costing. Data for the Testing Department for October 2009 are: (see attachment)

1) What is the percentage of completion 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 cost category, compute equivelent units in the Testing Department. Show physical units in the first column of your schedule.

3) For each category, summarize total Testing Department costs for October 2009, 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.


Solution Summary

The solution provides the exact calculations and detailed analysis of each question presented in the Larsen Company car seat case.