McDuffy Robotics, a subsidiary of U.S.-based International Robotics, located in Dublin, Ireland, manufactures a small robot which looks like a leprechaun and can be moved by remote control. It can be used as a novelty to serve food and drinks to guests; and, with a special attach- ment, it can vacuum the carpet. The materials are all added at the beginning of the Assembly Operation (the first operation). Labor and overhead are added during the month. Data for the month of July in the Assembly Operation are as follows:

Required:
1. Prepare a cost of production report for the Assembly Operation for the month of July.
2. Explain how management could use this report.

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Work in process, July 1 Units started in process Work in process, July 1: Materials.... Labor and overhead July's costs: Materials Labor and overhead Units 20,000 250,000 Costs (in U.S. Dollars) $ 240,000 80,000 $3,500,000 1,457,280 The inventory of work in process on July 1 was complete as to materials but only one-fourth complete as to labor and overhead. On July 31, the inventory consisted of 20,000 units that were 40 percent complete with respect to labor and overhead.