Bright Colors Company Placed 315,000 Gallons of Direct Materials into the Mixing

question 92

Essay

Bright Colors Company placed 315,000 gallons of direct materials into the mixing process. All direct materials are placed in mixing at the beginning of the process and conversion costs occur evenly during the process. Bright Colors uses weighted-average costing. The initial forecast for the end of the month was to have 75,000 gallons still in process, 15% converted as to labor and factory overhead.
Required:
a.Determine the total equivalent units (in process and transferred out) for direct materials and for conversion costs, assuming there was no beginning inventory.
b.With the installation of a new paint processing filtration device, the forecast for the end of the month was to have 50,000 gallons still in process, 70% converted as to labor and factory overhead. In this event, determine the equivalent units (in process and transferred out) for direct materials and for conversion costs, assuming there was no beginning inventory.

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Definitions:

Standard Hours

The predetermined amount of time expected to complete a task or produce a unit of product under normal conditions.

Total Standard Cost

The aggregated cost of direct materials, direct labor, and manufacturing overhead used in producing a product under standard costing.

Standard Cost

The planned cost for a unit of product or service, serving as a benchmark for evaluating performance and setting budgets.

Net Operating Income

The profit a company makes after deducting its operating expenses, without accounting for taxes and interest.