Question

WaterWorthy 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 cost transferred into Finished Goods Inventory is the cost of the lifts transferred out of the Testing Department. WaterWorthy uses weighted-average process costing.

Answer 1

The cost transferred into Finished Goods Inventory by WaterWorthy includes all costs from forming, assembling, and testing, calculated using weighted-average process costing.

Step-by-step explanation:

In weighted-average process costing, the cost transferred into Finished Goods Inventory reflects the cumulative cost of manufacturing, which includes forming, assembling, and testing personal watercraft lifts. When WaterWorthy completes testing a lift, its costs are aggregated from all production stages, using a weighted-average of the costs incurred throughout the process. This figure signifies the cost of lifts moving out of the Testing Department, which is the final stage before the product is considered finished goods.

The mathematical models can estimate costs for various production alternatives, factoring in materials, manufacturing, and maintenance expenses to predict the cost of processing per thousand gallons of water. Buoyant forces explain why formed steel structures will float when shaped correctly, as they displace water and experience force greater than their weight. This principle is important in the context of personal watercraft lifts, highlighting the importance of design in manufacturing.