. Kristina Company, which manufactures quality paint sold at premium prices, uses a single production department. Pro- duction begins with the blending of various chemicals, which are added at the beginning of the process, and ends with the canning of the paint. Canning occurs when the mixture reaches the 90 percent stage of completion. The gallon cans are then transferred to the Shipping Department for crating and shipment. Labor and overhead are added continuously throughout the process. Factory overhead is applied on the basis of direct labor hours at the rate of $3.00 per hour. Prior to May, when a change in the process was implemented, work in pro- cess inventories were insignificant. The change in the process enables greater production but has resulted in significant amounts of work in process for the first time. The company has always used the weighted average method to determine equivalent production and unit costs. Now, production management is consider- ing changing from the weighted average method to the first-in, first-out method.

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The following data relate to actual production during the month of May: Costs for May Work in process inventory, May 1: (4,000 gallons, 25% complete) Direct materials-chemicals Direct labor ($10 per hour) Factory overhead $ 45,600 6,250 1,875 May's costs added: Direct materials-chemicals 228,400 Direct materials-cans 7,000 Direct labor ($10 per hour) 35,000 Factory overhead 10,500 Units for May Gallons Work in process inventory. May 1 (25% complete). Serit to Shipping Department Started in May Work in process inventory, May 31 (80% complete). Required: 4,000 20,000 21,000 5,000 1. Prepare a schedule of equivalent units for each cost element using the: (a) Weighted average method. (b) First-in, first-out method. 2. Calculate the cost (to the nearest cent) per equivalent unit for each cost ele- ment using the: (a) Weighted average method. (b) First-in, first-out method. 3. Discuss the advantages and disadvantages of using the weighted average method versus the first-in, first-out method, and explain under what circum- stances each method should be used.