Springtime Paints makes quality paint in one production department. Production 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 at the rate of $ 3 per direct labor hour.

Prior to May, when a change in the process was implemented, work in process inventories were insignificant. The change in process enables more production but results in large amounts of work in process. The company has always used the weighted average method to determine equivalent production and unit costs. Now production management is considering changing from the weighted average method to the first-in, first-out method.

WIP Inventory, May 1

Direct material- chemicals $45,100

Direct labor ($10 per hour) 5,250

Factory Overhead 1,550

Cost for May

Direct material- chemicals $228,900

Direct material- cans 7,000

Direct labor ($10 per hour) 35,000

Factory Overhead 11,000

Units for May (Gallons)

WIP inventory, May 1 (25% complete) 4,000

Sent to Shipping Department 20,000

Started in May 21,000

WIP inventory, May 31 (80% complete) 5,000

a. Prepare a cost of production report for May using the WA method.

b. Prepare a cost of production report for May using the FIFO method.

c. Discuss the advantages and disadvantages of suing the WA method versus the FIFO method, and explain under what circumstances each method should be used.

Problem 6-55 Name: Insert your answers in the gray-shaded cells of columns B, C, E, G, and I. If an answer is incorrect, an asterisk will appear. a. Springtime Paints Cost of Production Report For the Month of May 31, XXXX Production Data: Beginning inventory Units started Units Units to account for Units Direct Materials Chemicals Cans Conversion Total Direct Materials Chemicals Cans Conversion Beginning WIP inventory Started & completed Ending WIP inventory Equivalent units Cost Data: Beginning inventory Current cost Total costs Divided by EUP Cost per equivalent unit Cost Assignment: Transferred out Ending WIP: Chemicals Conversion Total costs accounted for b. Units Cost x x x Springtime Paints Cost of Production Report For the Month of May 31, XXXX Production Data: Beginning WIP inventory Units started Units Units to account for Units Direct Materials Chemicals Cans Conversion Total Direct Materials Chemicals Cans Conversion Beginning WIP Started & completed Ending WIP inventory Units accounted for Cost Data: Beginning inventory Current cost Total costs Divided by EUP Cost per equivalent unit Cost Assignment Transferred out: Beginning WIP inventory Complete beginning WIP: Cans Conversion Total cost of BI transferred Started & completed Ending WIP inventory: Chemicals Conversion Total cost accounted for Units Cost x x x x c. (Key essay answer here.)