Question 1

Refer to the following information listed below:

Direct material used $150,000
Selling costs $5,000
Indirect labour $7,000
Administrative costs $10,000
Depreciation on factory equipment $70,000
Direct labour $40,000
Overtime premiums paid $20,000
Indirect materials $45,000


Based on the information provided above, calculate the period costs:

  1. $15,000
  2. $20,000
  3. $190,000
  4. $372,000


Question 2

Yang Manufacturing makes a product called Yin. The relevant range of operations is between 2,500 units and 10,000 units of Yin per month. Per unit costs at two activity levels are as follows: 5,000 units at $17.00 per unit; 7,500 units at $13.00 per unit. Determine the cost formula that expresses the behaviour of Yang’s total costs.


Question 3

The following information relates to Wells Fargo for July 2008:

Actual direct labour costs                                                  $80,000

Actual direct labour rate per hour                                   $8

Factory overhead rate per direct labour hour              $12

Factory overhead incurred                                                $160,000


Assuming underapplied or overapplied overhead is transferred to cost of goods sold at the end of the period, calculate the cost of goods sold account.


Question 4

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.



  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?


Question 5

The following information relates to the Moonie Park Manufacturing Company for the year 2012.


Plant capacity                                                                                      480,000 machine hours

Normal level of production                                                              432,000 machine hours

Budgeted level of production                                                          360,000 machine hours

Budgeted manufacturing overhead                                               $2,160,000

Actual manufacturing overhead for the month of                     $175,000

Actual machine hours used for February 2012                           35,000

Calculate the predetermined overhead rates per machine hour based on practical capacity, normal capacity and budgeted capacity respectively.

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