More info The lifts are transferred to Finished Goods Inventory before shipment to marinas across the country. MarineWork's Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for the month of August: MarineWork 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. The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. (Click the icon to view additional information.) MarineWork 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.) Units accounted for: cosTs Costs to account for: Total costs to account for Cost per equivalent unit Costs accounted for: \begin{tabular}{cccc} Transferred & Direct & Conversion & Total \\ In & Materials & Costs & Costs \\ \hline \end{tabular} Cost per equivalent unit Costs accounted for: 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 per lift. 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 Cost of Goods Sold on the Income Statement. C. Managers use the cost per lift for external financial reporting - specifically to calculate the ending inventory balances on the Balance Sheet. 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
