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Sea Worthy uses three processes to manufacture lifts for personal watercrafts: forming a lift's parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to finished goods before shipment to marinas across the country. Sea Worthy's Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for October 2018: UNITS Beginning Work-in-Process Inventory Transferred in from Assembling Department during the period 2,300 units 6,800 units

Sea Worthy uses three processes to manufacture lifts for personal watercrafts: forming a lift's parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to finished goods before shipment to marinas across the country. Sea Worthy's Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for October 2018: UNITS Beginning Work-in-Process Inventory Transferred in from Assembling Department during the period 2,300 units 6,800 units

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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3 4 The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. Sea Worthy uses weighted-average process costing. 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 this cost? Equivalent Units Transferred to next department Ending WIP Units Partially Completed Material, Conversion Equivalent Units Cost per Equivalent Unit Beginning WIP Costs added during period Total Cost Equivlent Units Cost per Equivalent Unit Cost per Unit $+$= Total Cost of Units Transferred *$= Cost of Ending WIP Materials *$===========> Cost of Ending WIP Conversion *$===========> Ending WIP Cost Reconciliation Costs to be accounted for: Beginning WIP Costs added during period Total Costs Ending WIP Cost of Units Transferred to next department Total Costs Date Account Journal Debit Materials Materials Credit Conversion Conversion
Transcribed Image Text:3 4 The cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. Sea Worthy uses weighted-average process costing. 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 this cost? Equivalent Units Transferred to next department Ending WIP Units Partially Completed Material, Conversion Equivalent Units Cost per Equivalent Unit Beginning WIP Costs added during period Total Cost Equivlent Units Cost per Equivalent Unit Cost per Unit $+$= Total Cost of Units Transferred *$= Cost of Ending WIP Materials *$===========> Cost of Ending WIP Conversion *$===========> Ending WIP Cost Reconciliation Costs to be accounted for: Beginning WIP Costs added during period Total Costs Ending WIP Cost of Units Transferred to next department Total Costs Date Account Journal Debit Materials Materials Credit Conversion Conversion
P18-43B Preparing a production cost report, second department with beginning WIP; decision making Sea Worthy uses three processes to manufacture lifts for personal watercrafts: forming a lift's parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to finished goods before shipment to marinas across the country. Sea Worthy's Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for October 2018: 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 conver- sion work) COSTS Beginning Work-in-Process Inventory (transferred in costs, $93,400; conversion costs, $18,100) Transferred in from the Assembly Department during the period Conversion costs added during the period 2,300 units 6,800 units 4,100 units 5,000 units $ 111,500 671,000 49,000
Transcribed Image Text:P18-43B Preparing a production cost report, second department with beginning WIP; decision making Sea Worthy uses three processes to manufacture lifts for personal watercrafts: forming a lift's parts from galvanized steel, assembling the lift, and testing the completed lift. The lifts are transferred to finished goods before shipment to marinas across the country. Sea Worthy's Testing Department requires no direct materials. Conversion costs are incurred evenly throughout the testing process. Other information follows for October 2018: 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 conver- sion work) COSTS Beginning Work-in-Process Inventory (transferred in costs, $93,400; conversion costs, $18,100) Transferred in from the Assembly Department during the period Conversion costs added during the period 2,300 units 6,800 units 4,100 units 5,000 units $ 111,500 671,000 49,000
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