January February $67,200 $11,520 $38,400 100,000 96,000 April $64,512 $15,667 $36,864 96,000 92,160 March $60,480 $12,960 $34,560 90,000 86,400 May $57,120 $16,320 $32,640 85,000 81,600 June 1 2 Paper stock 3 Coating 4 Conversion cost (incl. energy) 5 Pounds input to the process 6 Pounds transferred out $63,840 $11,856 $36,480 $53,760 $18,432 $30,720 80,000 76,800 95,000 91,200

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question

Pix Paper Inc. produces photographic paper for printing digital images. One of the processes for this operation is a coating (solvent spreading) operation, where chemicals are coated onto paper stock. There has been some concern about the cost performance of this operation. As a result, you have begun an investigation. You first discover that all materials and conversion prices have been stable for the last six months. Thus, increases
in prices for inputs are not an explanation for increasing costs. However, you have discovered three possible problems from some of the operating personnel whose quotes follow:
Operator 1: “I’ve been keeping an eye on my operating room instruments. I feel as though our energy consumption is becoming less efficient.”
Operator 2: “Every time the coating machine goes down, we produce waste on shutdown and subsequent startup. It seems as though during the last half year, we have had more unscheduled machine shutdowns than in the past. Thus, I think our yields must be dropping.”
Operator 3: “My sense is that our coating costs are going up. It seems as though we are spreading a thicker coating than we should. Perhaps the coating machine needs to be recalibrated.”
The Coating Department had no beginning or ending inventories for any month during the study period. The following data from the cost of production report are made available:
Attachment
a. Prepare a table showing the paper cost per output pound, coating cost per output pound, conversion cost per output pound, and yield (pounds transferred out/pounds input) for each month. Round costs to the nearest cent and yield to the nearest whole percent.
b. Interpret your table results.

January February
$67,200
$11,520
$38,400
100,000
96,000
April
$64,512
$15,667
$36,864
96,000
92,160
March
$60,480
$12,960
$34,560
90,000
86,400
May
$57,120
$16,320
$32,640
85,000
81,600
June
1
2 Paper stock
3 Coating
4 Conversion cost (incl. energy)
5 Pounds input to the process
6 Pounds transferred out
$63,840
$11,856
$36,480
$53,760
$18,432
$30,720
80,000
76,800
95,000
91,200
Transcribed Image Text:January February $67,200 $11,520 $38,400 100,000 96,000 April $64,512 $15,667 $36,864 96,000 92,160 March $60,480 $12,960 $34,560 90,000 86,400 May $57,120 $16,320 $32,640 85,000 81,600 June 1 2 Paper stock 3 Coating 4 Conversion cost (incl. energy) 5 Pounds input to the process 6 Pounds transferred out $63,840 $11,856 $36,480 $53,760 $18,432 $30,720 80,000 76,800 95,000 91,200
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education