HA2011 Management Accounting - Assignment 1

Week 4 Question (10 marks)

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 1 May and 31 May of 62,000 units and 70,000 units, the latter of which was 40 per cent complete. The production supervisor noted that Fedora completed 100,000 units during the month.

Costs in the 1 May work in process inventory were subdivided as follows:

• Materials = $40,000
• Conversion = $90,000

During May Fedora charged production with $300,000 of material and $710,000 of conversion, resulting in a material cost per equivalent unit of $2.

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.
4. Compute the cost of the 31 May work in process inventory.
5. What account would have been credited to record Fedora's completed production?