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Fedora, Inc, uses a weighted-average process-costing system andhas one production department. All materials are introduced...

Fedora, Inc, uses a weighted-average process-costing system and has one production department. All materials are introduced at the start of manufacturing; in contrast, conversion cost is incurred uniformly throughout production. The company had respective work-in-process inventories on May 1 and May 31 of 63,200 units and 76,000 units, the latter of which was 50% complete. The production supervisor noted that Fedora completed 112,000 units during the month.


Costs in the May 1 work-in-process inventory were subdivided as follows: materials, $46,000; conversion, $102,000. During May, Fedora charged production with $348,800 of material and $830,000 of conversion, resulting in a material cost per equivalent unit of $2.10.

Required:

  1. Determine the number of units that Fedora started during May.

  2. Compute the number of equivalent units with respect to conversion cost.

  3. Determine the conversion cost per equivalent unit.(Round your final answers to two decimal places.)

  4. Compute the cost of the May 31 work-in-process inventory.(Round your intermediate calculations to 2 decimal places and final answers to nearest whole dollar.)

  5. What account would have been credited to record Fedora's completed production?

Solutions

Expert Solution

(A.) No. of units started that Feroda started during May = 124,800

Calculation: Units started = Units completed + Units in ending WIP - Units in beginning WIP

= 112,000 + 76,000 - 63,200

= 124,800 Units

(B.) Equivalent units for conversion cost = 150,000 Units

Statement showing Equivalent Units

(Weighted Average Method)
Units Material Conversion Cost
% Units % Units
Units Transferred 112,000 100% 112,000 100% 112,000
Closing WIP 76,000 100% 76,000 50% 38,000
TOTAL 188,000 188,000 150,000

(C.) Conversion cost per equivalent unit = $ 6.21

Conversion Cost
Cost of Beginning WIP (A) $ 102,000
Cost incurred during the year (B) $ 830,000
Total Conversion cost (C=A+B) $ 932,000
Equivalent units for conversion cost (D) 150,000 units
Conversion cost per equivalent unit (E=C/D) $ 6.2133 or $ 6.21

(D.) Cost of WIP for May31 = $ 400,140

Equivalent Units Cost per Equivalent Unit Total cost
Direct Materials 76,000 $ 2.10 $ 159,600
Conversion cost 38,000 $ 6.21 $ 235,980
TOTAL COST OF ENDING WIP $ 395,580

(E.) Work in Process Inventory should be Credited to record Feroda's completed production. (Finished Goods Inventory is Debited).

ekkarill92 answered 2 years ago
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