Question

Scribners Corporation produces fine papers in three production departments—Pulping, Drying, and Finishing. In the Pulping Department, raw materials such as wood fiber and rag cotton are mechanically and chemically treated to separate their fibers. The result is a thick slurry of fibers. In the Drying Department, the wet fibers transferred from the Pulping Department are laid down on porous webs, pressed to remove excess liquid, and dried in ovens. In the Finishing Department, the dried paper is coated, cut, and spooled onto reels. The company uses the weighted-average method in its process costing system. Data for March for the Drying Department follow:

		Percent Completed
	Units	Pulping			Conversion
Work in process inventory, March 1	3,400	100	%		80	%
Work in process inventory, March 31	4,000	100	%		75	%
Pulping cost in work in process inventory, March 1				$	2,295
Conversion cost in work in process inventory, March 1				$	1,360
Units transferred to the next production department					166,400
Pulping cost added during March				$	116,985
Conversion cost added during March				$	73,176

No materials are added in the Drying Department. Pulping cost represents the costs of the wet fibers transferred in from the Pulping Department. Wet fiber is processed in the Drying Department in batches; each unit in the above table is a batch and one batch of wet fibers produces a set amount of dried paper that is passed on to the Finishing Department.

Required:

1. Compute the Drying Department's equivalent units of production for pulping and conversion in March.

2. Compute the Drying Department's cost per equivalent unit for pulping and conversion in March.

3. Compute the Drying Department's cost of ending work in process inventory for pulping, conversion, and in total for March.

4. Compute the Drying Department's cost of units transferred out to the Finishing Department for pulping, conversion, and in total in March.

5. Prepare a cost reconciliation report for the Drying Department for March.

Answer 1

Requirement 1

	Pulping	Conversion
Equivalent Units of Production	1,70,400	1,69,400

Requirement 2

	Pulping	Conversion
Cost per equivalent Unit	$           0.70	$            0.44

Requirement 3 and 4

	Pulping	Conversion	Total
Units Completed	$ 1,16,480	$       73,216	$   1,89,696
Ending Inventory	$        2,800	$         1,320	$         4,120

Requirement 5

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$       3,655.00
Cost incurred during period	$ 1,90,161.00
Total cost to be accounted for	$ 1,93,816.00
Costs accounted for as follows:
Cost of Units Transferred Out	$ 1,89,696.00
Cost of Ending Wip	$       4,120.00
Total cost accounted for	$ 1,93,816.00

Working

Reconciliation of Units
A	Opening WIP	3,400
B	Introduced	1,67,000
C=A+B	TOTAL	1,70,400
D	Transferred	1,66,400
E=C-D	Closing WIP	4,000

Statement of Equivalent Units
				Pulping		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	1,66,400			100%	1,66,400	100%	1,66,400
Closing WIP	4,000			100%	4,000	75%	3,000
Total	1,70,400			Total	1,70,400	Total	1,69,400

Cost per Equivalent Units
COST		Pulping	Conversion	TOTAL
Beginning WIP Inventory Cost		$         2,295	$         1,360	$                3,655
Cost incurred during period		$   1,16,985	$       73,176	$          1,90,161
Total Cost to be accounted for		$   1,19,280	$       74,536	$          1,93,816
Total Equivalent Units		1,70,400	1,69,400
Cost per Equivalent Units		$            0.70	$           0.44

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Pulping	$                  0.70	4,000	$         2,800	$          1,66,400	$       1,16,480
Conversion	$                  0.44	3,000	$         1,320	$          1,66,400	$           73,216
TOTAL	$          1,93,816	TOTAL	$         4,120	TOTAL	$       1,89,696

Reconciliation and Cost report
Cost to be accounted for
Beginning Work In Progress:
Pulping	$          2,295.00
Conversion	$          1,360.00	$                                     3,655.00
Cost incurred during period:
Pulping	$    1,16,985.00
Conversion	$        73,176.00	$                               1,90,161.00
Total Cost to be accounted for				$    1,93,816.00
Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Pulping	1,66,400	$            0.70	$     1,16,480.00
Conversion	1,66,400	$            0.44	$         73,216.00
				$    1,89,696.00
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Pulping	4,000	$            0.70	$           2,800.00
Conversion	3,000	$            0.44	$           1,320.00
				$          4,120.00
Total Cost accounted for				$    1,93,816.00