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Darwin Water uses three processes to manufacture lifts for personal watercraft: forming a lift's parts from galvanised steel, assembling the lift, and testing the completed

Darwin Water uses three processes to manufacture lifts for personal watercraft: forming a lift's parts from galvanised steel, assembling the lift, and testing the completed lifts. The lifts are transferred to finished goods before shipment to marinas across the country. Darwin Water's Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows: Units Beginning work in process 2,000 Transferred in from the Assembling Department during the period 7,000 Completed during the period 4,000 Ending work in process (40% complete as to conversion work) 5,000 Costs Beginning work in process transferred in cost $93,000 Conversion cost $18,000 $111,000 Transferred in from the Assembling Department during the period $672,000 Conversion costs added during the period $48,000 The cost transferred into finished goods inventory is the cost of the lifts transferred out of the Testing Department. Darwin Water uses weighted-average process costing.

REQUIRED: 1. Compute the number of equivalent units of work performed by the Testing Department during the period, the cost per equivalent unit and total costs to account for. (6 marks)

2. Assign total costs to the units completed and transferred out of the Testing Department, and the units in the Testing Department's ending work in process inventory.

3. Compute the cost per unit for lifts completed and transferred out to finished goods inventory. Why would management be interested in this cost? (4 marks)

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