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Caricolor Limited operates a paint manufacturing plant, housing two distinct departments: the mixing department and the quality control department. The paint undergoes sequential processing in both of these departments. The company's process-costing system is structured around two primary cost categories: direct materials and conversion costs. Direct materials are introduced at the initial stages of the process, while conversion costs are gradually incurred throughout the process. After completion of the mixing department's tasks on the paint, the product is promptly forwarded to the quality control department. Caricolor employs the weighted-average method for process costing to calculate its manufacturing costs. Data for the mixing department for October 2020 are as follows Physical Units wwwwwwww Costs Work in process, October 1x Started during October 2020 Completed during October 2020 Work in process, October 31y Total costs added during October 2020 (Gallons of Paint) Direct Materials Conversion 16,000 44,000 51,000 9,000 $2,800,000 $ 901,400 $9,400,000 $5,111,000 x Degree of completion: direct materials, 100%; conversion costs, 60%. y Degree of completion: direct materials, 100%; conversion costs, 70% Required: 1. Compute equivalent units in the mixing department, for each cost category? 2. Summarize total mixing department costs for October 2020 for each cost category, and calculate the cost per equivalent unit? 3. Assign total costs to units completed and transferred out and to units in ending work in process? 4. By reference to the above data: a) Explain the concept of equivalent units in process costing? b) What issues should a manager focus on when reviewing the equivalent unit calculation?

Caricolor Limited operates a paint manufacturing plant, housing two distinct departments: the mixing department and the quality control department. The paint undergoes sequential processing in both of these departments. The company's process-costing system is structured around two primary cost categories: direct materials and conversion costs. Direct materials are introduced at the initial stages of the process, while conversion costs are gradually incurred throughout the process. After completion of the mixing department's tasks on the paint, the product is promptly forwarded to the quality control department. Caricolor employs the weighted-average method for process costing to calculate its manufacturing costs. Data for the mixing department for October 2020 are as follows Physical Units wwwwwwww Costs Work in process, October 1x Started during October 2020 Completed during October 2020 Work in process, October 31y Total costs added during October 2020 (Gallons of Paint) Direct Materials Conversion 16,000 44,000 51,000 9,000 $2,800,000 $ 901,400 $9,400,000 $5,111,000 x Degree of completion: direct materials, 100%; conversion costs, 60%. y Degree of completion: direct materials, 100%; conversion costs, 70% Required: 1. Compute equivalent units in the mixing department, for each cost category? 2. Summarize total mixing department costs for October 2020 for each cost category, and calculate the cost per equivalent unit? 3. Assign total costs to units completed and transferred out and to units in ending work in process? 4. By reference to the above data: a) Explain the concept of equivalent units in process costing? b) What issues should a manager focus on when reviewing the equivalent unit calculation?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter6: Process Costing
Section: Chapter Questions
Problem 14E: Lacy, Inc., produces a subassembly used in the production of hydraulic cylinders. The subassemblies...
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Caricolor Limited operates a paint manufacturing plant, housing two distinct departments: the mixing department and the quality control department. The paint undergoes sequential processing in both of these departments. The company's process-costing system is structured around two primary cost categories: direct materials and conversion costs. Direct materials are introduced at the initial stages of the process, while conversion costs are gradually incurred throughout the process. After completion of the mixing department's tasks on the paint, the product is promptly forwarded to the quality control department. Caricolor employs the weighted-average method for process costing to calculate its manufacturing costs. Data for the mixing department for October 2020 are as follows Physical Units wwwwwwww Costs Work in process, October 1x Started during October 2020 Completed during October 2020 Work in process, October 31y Total costs added during October 2020 (Gallons of Paint) Direct Materials Conversion 16,000 44,000 51,000 9,000 $2,800,000 $ 901,400 $9,400,000 $5,111,000 x Degree of completion: direct materials, 100%; conversion costs, 60%. y Degree of completion: direct materials, 100%; conversion costs, 70% Required: 1. Compute equivalent units in the mixing department, for each cost category? 2. Summarize total mixing department costs for October 2020 for each cost category, and calculate the cost per equivalent unit? 3. Assign total costs to units completed and transferred out and to units in ending work in process? 4. By reference to the above data: a) Explain the concept of equivalent units in process costing? b) What issues should a manager focus on when reviewing the equivalent unit calculation?
Transcribed Image Text:Caricolor Limited operates a paint manufacturing plant, housing two distinct departments: the mixing department and the quality control department. The paint undergoes sequential processing in both of these departments. The company's process-costing system is structured around two primary cost categories: direct materials and conversion costs. Direct materials are introduced at the initial stages of the process, while conversion costs are gradually incurred throughout the process. After completion of the mixing department's tasks on the paint, the product is promptly forwarded to the quality control department. Caricolor employs the weighted-average method for process costing to calculate its manufacturing costs. Data for the mixing department for October 2020 are as follows Physical Units wwwwwwww Costs Work in process, October 1x Started during October 2020 Completed during October 2020 Work in process, October 31y Total costs added during October 2020 (Gallons of Paint) Direct Materials Conversion 16,000 44,000 51,000 9,000 $2,800,000 $ 901,400 $9,400,000 $5,111,000 x Degree of completion: direct materials, 100%; conversion costs, 60%. y Degree of completion: direct materials, 100%; conversion costs, 70% Required: 1. Compute equivalent units in the mixing department, for each cost category? 2. Summarize total mixing department costs for October 2020 for each cost category, and calculate the cost per equivalent unit? 3. Assign total costs to units completed and transferred out and to units in ending work in process? 4. By reference to the above data: a) Explain the concept of equivalent units in process costing? b) What issues should a manager focus on when reviewing the equivalent unit calculation?
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