Reef Wave 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. ReefWave uses weighted average process costing. 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.) ReelWave More Info - X Production Cost Report-Testing Department Month Ended August 31 Equivalent Units The lifts are transferred to Finished Goods Inventory before shipment to marinas across the country. ReefWave's Testing Department requires no direct materials. Conversion costs are Physical Transferred Direct Conversion incurred evenly throughout the testing process. Other information follows for the month of August: UNITS Units In Materials Costs UNITS Units to account for Beginning Work-in-Process Inventory 2.500 units Transferred in from Assembling Department during the period 7.300 units Completed during the period 3.900 units Total units to account for Ending Work-in-Process Inventory (40% complete for conversion work) 5.900 units COSTS Units accounted for Beginning Work-in-Process Inventory (transferred in costs. $97.000; n/a conversion cost, 17,000) $ 114,000 n/a Transferred in from the Assembly Department during the period 716.400 n/a Total units accounted for Conversion costs added during the period 51.860 Transferred Direct Conversion Total Print Done Transferred Direct Materials Conversion Costs Total Costs COSTS In Costs to account for: n/a n/a Total costs to account for n/a n/a nia Cost per equivalent unit Costs accounted for: n/a n/a n/a Total costs accounted for Requirements - X 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 this cost? Print Done 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 s Why would management be interested in the cost per unit for lifts completed and transferred out to Finished Goods Inventory? per i O A. Managers use the cost per lift for external financial reporting-specifically to calculate the cost of Goods Sold on the Income Statement. O B. Managers use the cost per lift for external financial reporting specifically to calculate the ending inventory balances on the Balance Sheet. OC. 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. OD. 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
