The Shalimar Paint Company makes a variety of latex- and oil-based paints for interior and exterior use.

Question:

The Shalimar Paint Company makes a variety of latex- and oil-based paints for interior and exterior use. The process for making paint is virtually the same regardless of the color. Because it takes considerable time and effort to switch colors, however, the firm uses a sophisticated model to schedule colors, usually going from lighter to darker shades. Further, Shalimar produces a large quantity of each color, counting each color as a batch. Consequently, Shalimar uses a process-costing system to value its inventories.
The production process begins by mixing all of the needed materials. After a series of steps, the paint is filled in gallon-sized cans when the conversion process is 95% complete. Shalimar incurs conversion costs uniformly throughout the process.
On April 1, Shalimar had 45,000 gallons of lilac paint in work-in-process inventory. Shalimar valued this inventory at $280,350, comprising $198,000 for materials and $82,350 for conversion costs. Moreover, Shalimar estimates that its beginning WIP inventory on April 1 is 60% complete with respect to conversion costs.
During April, Shalimar started an additional 145,000 gallons of lilac paint into production.
On April 30, Shalimar had only 5,000 gallons of lilac paint still in process. Of this amount, 4,000 gallons were 50% complete with respect to conversion costs, while the remaining 1,000 gallons were 98% complete with respect to conversion costs.
Shalimar spent $657,000 on materials, $481,590 on conversion costs, and $139,500 on cans during April.

Required:
a. Prepare Shalimar’s process-costing report for April. What is Shalimar’s cost of goods manufactured for lilac paint for April? What is the cost of Shalimar’s April 30 work-in-process inventory of lilac paint?
b. Assume Shalimar uses standard process costing to value its inventories, valuing each equivalent unit for materials, conversion costs, and cans at standard costs of $4.40, $2.95, and $0.78, respectively. Compute Shalimar’s materials variance, conversion cost variance, and can variance for April.