Question

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.) WaterBound Production Cost Report-Testing Department Month Ended August 31 Equivalent Units Physical Transferred Direct Conversion Materials Units In Costs UNITS Units to account for Total units to account for Units accounted for n'a na n/a Tolal unils apcounted for Transferred Direct Conversion Tota In Materials Costs Costs COSTS Costs to acoount for nia nva Total costs to account for nia nva nva Cost per equivalent unit Costs accounted for: na Total 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? per lift The cost per unit for lifts completed and transferred out to Finished Goods Inventory is $ r unit Why would management be interested in the cost p r lifts completed and transferred out to Finished Goods Inventory? O A. Managers use the cost per lift for external financial reporting-apecifically to calculate O B. Managers would compare the average cost per lift against their budgeted costs to determine whether the costs of the Testing Department remain under control r s are figher thian ie atuail eiv per lint, then tne sis ending inventory balances o the Balance Sheet. | investigate regain jers O c. Managers use the cost per lift for external financial reporting specifically to calculate the Cost of Goods Scld on the Income Statement. O D. All of the above are reasons why management would be interested in this cost per unit for lifts completed and transfeed out to Finished Goods Inventory - X i More Info to the near 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: UNITS 2,300 units Beginning Work-in-Process Inventory Transferred in from Assembling Department during the period 7,100 units Completed during the period 3,900 units Ending Work-in-Process Inventory (40% complete for conversion work) 5,500 units COSTS costs Beginning Work-in- ess Inventory 0,000; rred conversion cost, $16,000) $ 106,000 671,400 Transferred in from the Assembly Department during the period Conversion costs added during the period 38,900 X Requirements Prepare a production cost report for the Testing Department 1. 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

Answer 1

cost report of water bound

	Equivalent units
	Physical units	transferred in	direct material	conversion cost	Total cost
units
units to account for
Beginning work in process	2300 units
transferred in	7100 units
Total units to account for	9400 units
units accounted for
completed and transferred out	3900	3900	N/A	3900
ending work in process	5500	5500	N/A	2200 [5500*40%]
Total units accounted for	9400 units [3900+5500]	9400 units	N/A	6100 units [3900+2200]
COSTS
costs to account for:
Beginning Work in process		90000$	n/a	16000$	106000$
costs added during period		671400$	n/a	38900$	710300$
Total costs to accounts for		761,400$	n/a	54900$	816,300
cost per equivalent unit		81$ [761400/9400]		9$ [54900/6100]	90$
costs accounted for
completed and transferred out		315900 [3900*81]		35100 [3900*9]	351000
ending work in process		445500 [5500*81]		19800 [2200*9]	465300
Total costs accounted for		761400		54900	816300

requirement 2

cost per lift = total cost / units completed

351000/3900units

=90$ per unit

The average cost is used to determine whether the cost remain in control.By comparing it with budgeted cost the managers will determine whether the average cost is more than budgeted cost or lesser than budgeted cost.

Managers also use average cost to calculated cost of goods sold on income statement and inventory on balance sheet.

answer D

=