Composition
A carbon film resistor is made by coating a small ceramic rod with a film of carbon. A machine removes some of the carbon film in a spiral pattern around the rod to reach a particular resistance level between the two ends of the rod. Metal leads and end caps are added, then the finished rod is coated with an insulated cover. Finally, four colored bands are painted onto the rod in a code that gives information on its resistive values.
Uses
Carbon film resistors are commonly used in audio equipment because they combine a low cost with performance that preserves high fidelity sound. Carbon composition resistors are very cheap, general use resistors, but have higher tolerances than can be allowed in producing sound and have problems with noise and stability when hot. Metal film resistors are high quality with low tolerances but get pricey. Carbon film resistors provide the stability needed for audio systems while keeping costs low.
Economics
Composition resistors are commonly used in everyday circuits, as they are the cheapest type of resistors available. Wirewound resistors are very expensive and used in high-precision instruments. The film resistors are more expensive than the composition types and much less expensive than the wirewound types, but deliver low tolerances for appliances and applications that require precision. Carbon film resistors are the cheapest of the film resistors while offering much more precision and fidelity than the composition resistors.
Coding
There are different sizes and capacities of carbon film resistors. The four painted stripes on each resistor are a code that tells both the capacity of the resistor in ohms and the percentage of permissible variation, or tolerance, from the stated value. The first three bands are grouped with the fourth band separated from them at the opposite end. To read it properly, orient the three grouped bands to your left. The first two bands each represent a number. The third band tells you how many zeros to add to that number to give you the ohms. The fourth band tells you the tolerance, stated as plus or minus a numerical percentage.