BeachBound uses three processes to manufacture lifts for personal watercraft: forming a lift's

parts from galvanized steel, assembling the lift, and testing the completed lift.

$($Click the icon to view additional information.$)$

The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of

the Testing Department. BeachBound uses the weighted$-$average method.

Read the requirements.

Requirement $1.$ Prepare a production cost report for the Testing Department. $($Round all cost per unit amounts to the nearest cent and all other amounts to the nearest whole dollar.

Abbreviation used: EUP $=$ equivalent units of production.$)$

Production Cost Report$-$Testing Department

Month Ended August $31$

UNITS

Units to account for:

Total units to account for

Units accounted for:

n$/$a

Total units accounted for BeachBound uses three processes to manufacture lifts for personal watercraft: forming a lift's

parts from galvanized steel, assembling the lift, and testing the completed lift.

$($Click the icon to view additional information.$)$

The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of

the Testing Department. BeachBound uses the weighted$-$average method.

Requirement $2.$ What is the cost per unit for lifts completed and transferred out to Finished Goods Inventory? Why would management be interested in this cost?

The cost per unit for lifts completed and transferred out to Finished Goods Inventory is

Why would management be interested in the cost per unit for lifts completed and transferred out to Finished Goods Inventory?

A$.$ Managers would compare the average cost per lift against their budgeted costs to determine whether the costs of the Testing Department remain under control. If budgeted costs are higher

than the actual average cost per lift, then the managers have done a good job controlling costs. In contrast, if the budgeted costs are lower than the actual average cost per lift, managers

will investigate the reason for the higher$-$than$-$expected costs in an effort to regain control over costs. BeachBound uses three processes to manufacture lifts for personal watercraft: forming a lift's

parts from galvanized steel, assembling the lift, and testing the completed lift.

$($Click the icon to view additional information.$)$

The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of

the Testing Department. BeachBound uses the weighted$-$average method.

Read the requirements.

Requirement $2.$ What is the cost per unit for lifts completed and transferred out to Finished Goods Inventory? Why would management be interested in this cost?

The cost per unit for lifts completed and transferred out to Finished Goods Inventory is

Why would management be interested in the cost per unit for lifts completed and transferred out to Finished Goods Inventory?

A$.$ Managers would compare the average cost per lift against their budgeted costs to determine whether the costs of the Testing Department remain under control. If budgeted costs are higher

than the actual average cost per lift, then the managers have done a good job controlling costs. In contrast, if the budgeted costs are lower than the actual average cost per lift, managers

will investigate the reason for the higher$-$than$-$expected costs in an effort to regain control over costs.

B$.$ Managers use the cost per lift for external financial reporting$-$specifically to calculate the ending inventory balances on the Balance Sheet.

C$.$ Managers use the cost per lift for external financial reporting$-$specifically to calculate the Cost of Goods Sold on the Income Statement.

D$.$ All of the above are reasons why management would be interested in this cost per unit for lifts completed and transferred out to Finished Goods Inventory. BeachBound uses three processes to manufacture lifts for personal watercraft: forming a lift's

parts from galvanized steel, assembling the lift, and testing the completed lift.

$($i$)$

$($Click the icon to view additional information.$)$

The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of

the Testing Department. BeachBound uses the weighted$-$average method.

Read the requirements