How to fast-flow paints produces mixer base paint


Fast-Flow Paints produces mixer base paint through a two stage process, Mixing and Packaging. The following events depict the movement of value into and out of production. Journalize each event if appropriate, if not, provide a short narrative reason as to why you choose not to journalize that action. Bon, the production manager, accepts an order to continue processing the current run of mixer base paint.

(a) $27,000.00 worth of materials are withdrawn from Raw Materials inventory. Of this amount, $25,000.00 will be issued to the Mixing Department and the balance will be issued to the maintenance Department to be used on production line machines.

(b) Bob calculates that labor for the period is $12,000.00. Of this value $1,750.00 is for maintenance and indirect labor. The remainder is directly associated with mixing.

(c) Bob, who is paid a salary but earns about $35.00/hour, spends 1 hour inspecting the production line.

(d) The manufacturing overhead drivers for Mixing are hours of mixer time at $575.00 per hour, and material movements from Raw Materials at $125.00 per movement. An inspection of the machine timers reveals that at total of 8 hours has been consumed in making this product. An inspection of "Stocking Orders" indicates that only one material movement was utilized to "load" the raw materials.

(e) Within Fast-Flow items are transferred between departments at a standard cost or value. This production run has created 4,015 gallons of mixer base paint. This paint is transferred to Packaging at a standard cost of $10.05 per gallon.

(f) Packaging draws $755.00 in raw materials for packaging of this production run.

(g) Packaging documents that 12 hours of direct labor at $10.25 per hour were consumed in the packaging of this production run.

(h) Packaging uses a driver of direct labor hours to allocate manufacturing overhead at the rate of $25.00 per hour.

(i) Packaging transfers these 1,005 gallons of packaged goods to Finished Goods Inventory at a standard cost of $10.25 per gallon.

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Accounting Basics: How to fast-flow paints produces mixer base paint
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