WaterBound uses three processes to manufacture lifts for personal watercraft: forming a lifts parts from galvanized steel,

WaterBound 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 lifts are transferred to Finished Goods Inventory before shipment to marinas across the country. WaterBound’s Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for the month of August:

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

Requirements
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 thiscost?

Transcribed Image Text:

UNITS Beginning Work-in-Process Inventory Transferred in from Assembling Department during the period Completed during the period Ending Work-in-Process Inventory (40% complete for conversion work) COSTS 2,000 units 7,000 units 4,000 units 5,000 units conversion costs, $18,000) Transferred in from the Assembly Department during the period Conversion costs added during the period 111,000 672,000 54,000