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 2,300 units Transferred in from Assembling Department during the period 6,800 units Completed during the period 4,100 units Ending Work-in-Process Inventory (40% complete for conver- sion work) 5,000 units COSTS Beginning Work-in-Process Inventory (transferred in costs, $93,400; conversion costs, $18,100) $111,500 671,000 Transferred in from the Assembly Department during the period Conversion costs added during the period 49,000 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 Materials Conversion Materials Conversion 3 Cost per Unit $+$= Total Cost of Units Transferred *$= Cost of Ending WIP Materials *$= Cost of Ending WIP Conversion *$= Ending WIP ===> 4 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 Credit