Carson Paint Company, which manufactures quality paint to sell at premium prices, uses a single production department. Production begins by blending the various chemicals that are added at the beginning of the process and ends by filling the paint cans. The gallon cans are then transferred to the shipping department for crating and shipment. Direct labor and overhead are added continuously throughout the process. Factory overhead is applied at the rate of $3 per direct labor dollar. The company combines direct labor and overhead in computing product cost. Prior to May, when a change in the manufacturing process was implemented, Work-in-Process Inventories were insignificant. The changed manufacturing process, which has resulted in increased equipment capacity, allows increased production but also results in considerable amounts of Work-in-Process Inventory. Also, the company had 1,000 spoiled gallons in May-one- half of which was normal spoilage and the rest abnormal spoilage. The product is inspected at the end of the production process. These data relate to actual production during the month of May: Costs Work-in-Process Inventory, May 1 Direct materials $ 106,128 Direct labor 15,570 May costs added: Direct materials 424,512 62, 280 Direct labor Units Work-in-Process Inventory, May 1 30% complete as to conversion activity 100% complete as to direct materials 2,000 Sent to shipping department Started in May Work-in-Process Inventory, May 31 24,900 30,400 80% complete as to conversion activity 100% complete as to direct materials 6,500 Total spoilage (units), in May % Spoilage considered normal Stage of processing when spoilage is detected ? 50% 100% uired epare a production cost report for May using the weighted-average method. (Round "Cost per EU" answers to cimal places.)
Carson Paint Company, which manufactures quality paint to sell at premium prices, uses a single production department. Production begins by blending the various chemicals that are added at the beginning of the process and ends by filling the paint cans. The gallon cans are then transferred to the shipping department for crating and shipment. Direct labor and overhead are added continuously throughout the process. Factory overhead is applied at the rate of $3 per direct labor dollar. The company combines direct labor and overhead in computing product cost. Prior to May, when a change in the manufacturing process was implemented, Work-in-Process Inventories were insignificant. The changed manufacturing process, which has resulted in increased equipment capacity, allows increased production but also results in considerable amounts of Work-in-Process Inventory. Also, the company had 1,000 spoiled gallons in May-one- half of which was normal spoilage and the rest abnormal spoilage. The product is inspected at the end of the production process. These data relate to actual production during the month of May: Costs Work-in-Process Inventory, May 1 Direct materials $ 106,128 Direct labor 15,570 May costs added: Direct materials 424,512 62, 280 Direct labor Units Work-in-Process Inventory, May 1 30% complete as to conversion activity 100% complete as to direct materials 2,000 Sent to shipping department Started in May Work-in-Process Inventory, May 31 24,900 30,400 80% complete as to conversion activity 100% complete as to direct materials 6,500 Total spoilage (units), in May % Spoilage considered normal Stage of processing when spoilage is detected ? 50% 100% uired epare a production cost report for May using the weighted-average method. (Round "Cost per EU" answers to cimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Carson Paint Company, which manufactures quality paint to sell at premium prices, uses a single
production department. Production begins by blending the various chemicals that are added at
the beginning of the process and ends by filling the paint cans. The gallon cans are then
transferred to the shipping department for crating and shipment. Direct labor and overhead are
added continuously throughout the process. Factory overhead is applied at the rate of $3 per
direct labor dollar. The company combines direct labor and overhead in computing product cost.
Prior to May, when a change in the manufacturing process was implemented, Work-in-Process
Inventories were insignificant. The changed manufacturing process, which has resulted in
increased equipment capacity, allows increased production but also results in considerable
amounts of Work-in-Process Inventory. Also, the company had 1,000 spoiled gallons in May-one-
half of which was normal spoilage and the rest abnormal spoilage. The product is inspected at the
end of the production process.
These data relate to actual production during the month of May:
Costs
Work-in-Process Inventory, May 1
$ 106,128
15,570
Direct materials
Direct labor
May costs added:
Direct materials
424,512
Direct labor
62,280
Units
Work-in-Process Inventory, May 1
30% complete as to conversion activity
100% complete as to direct materials
2,000
Sent to shipping department
Started in May
Work-in-Process Inventory, May 31
24,900
30,400
80% complete as to conversion activity
100% complete as to direct materials
6,500
Total spoilage (units), in May
% Spoilage considered normal
Stage of processing when spoilage is detected
?
50%
100%
Required
1. Prepare a production cost report for May using the weighted-average method. (Round "Cost per EU" answers to
2 decimal places.)
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