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LC Clean Paint Pty Ltd manufactures two high-quality base paints: an oil-based paint and a latex paint. Both are housepaint and are manufactured in neutral
LC Clean Paint Pty Ltd manufactures two high-quality base paints: an oil-based paint and a latex paint. Both are housepaint and are manufactured in neutral white colour only. Clean Paint Pty Ltd sells the base white paints to franchised retail paint and decorating stores where pigments are added to tint (colour) the paint as the customer desires. The oil-bases paint is made with organic solvents (petroleum products) such as mineral spirits or turpentine. The latex paint is made with water; synthetic resin particles are suspended in the water, and dry and harden when exposed to the air. Clean Paint Pty Ltd uses the same processing equipment to produce both paints in different production runs. Between batches, the vats and other processing equipment must be washed and cleaned. After analysing the company's entire operations, Clean Paint Pty Ltd accountants and production have identified activity cost pools and accumulated annual budgeted overhead costs by pool as follows. Activity Cost Pools Estimated Overhead Purchasing $240,000 Processing (weighing and mixing, grinding, thinning and drying, straining) $1,400,000 Packaging (quarts, gallons and 5-gallons) $580,000 Testing $240,000 Storage and inventory control $180,000 Washing and cleaning equipment $560,000 Total annual budgeted overhead $3,200,000 Following further analysis, activity cost drivers were identified and their expected use by product and activity were scheduled as follows
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