Fedora, Inc

question 49

Essay

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 62,000 units and 70,000 units, the latter of which was 40% complete. The production supervisor noted that Federal completed 100,000 units during the month.
Costs in the May 1 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:
A. Determine the number of units that Fedora started during May.
B. Compute the number of equivalent units with respect to conversion cost.
C. Determine the conversion cost per equivalent unit.
D. Compute the cost of the May 31 work-in-process inventory.
E. What account would have been credited to record Fedora's completed production?

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Definitions:

Group-based Incentive System

A reward system where incentives are given to a group of employees based on their collective performance.

Knowledge-based Pay Plan

A compensation strategy where employees are paid based on their skills, knowledge, and abilities, rather than their job title or position.

Skill Variety

The degree to which a job requires a variety of different activities that involve the use of a number of different skills and talents of the person performing the job.

Motivation

Motivation refers to the processes that account for an individual's intensity, direction, and persistence of effort toward attaining a goal.