OceanBound uses three processes to manufacture lifts for personal watercrafts: forming a lifts parts from galvanized steel,

OceanBound uses three processes to manufacture lifts for personal watercrafts: forming a lift’s parts from galvanized steel, assembling the lift, and testing the completed lift. The lift are transferred to finished goods before shipment to marinas across the country. OceanBound’s Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for October 2014:

The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. OceanBound uses weighted-average process costing.

Requirements
1. Prepare a production cost report for the Testing Department.
2. What is the cost per unit for lifts completed and transferred out to Finished Goods Inventory? Why would management be interested in thiscost?

Transcribed Image Text:

UNITS Beginning Work-in-Process Inventory Transferred in from Assembling Department during the period Completed during the period Ending Work-in-Process Inventory (40% complete for 2,200 units 7,100 units 4,200 units conversion work) COSTS Beginning Work-in-Process Inventory (transferred in costs, $93,800; 5,100 units conversion costs, $18,200) 112,000 Transferred in from the Assembly Department during the period 706,000 44,200 Conversion costs added during the period