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	3,300	100	%		80	%
Work in process inventory, March 31	7,500	100	%		80	%
Pulping cost in work in process inventory, March 1				$	1,155
Conversion cost in work in process inventory, March 1				$	561
Units transferred to the next production department					157,800
Pulping cost added during March				$	60,006
Conversion cost added during March				$	33,837

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

	Material	Conversion
Equivalent Units of Production	1,65,300	1,63,800

Requirement 2

	Material	Conversion
Cost per equivalent Unit	$                   0.37	$                0.21

Requirement 3 and 4

	Material	Conversion	Total
Ending Inventory	$                 2,775	$             1,260	$         4,035
Units Completed	$              58,386	$           33,138	$       91,524

Requirement 5

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$       1,716.00
Cost incurred during period	$      93,843.00
Total cost to be accounted for	$      95,559.00
Costs accounted for as follows:
Cost of Units Transferred Out	$      91,524.00
Cost of Ending Wip	$       4,035.00
Total cost accounted for	$      95,559.00

Working note

Reconciliation of Units
A	Opening WIP	3,300
B	Introduced	1,62,000
C=A+B	TOTAL	1,65,300
D	Transferred	1,57,800
E=C-D	Closing WIP	7,500

Statement of Equivalent Units
				Material		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	1,57,800			100%	1,57,800	100%	1,57,800
Closing WIP	7,500			100%	7,500	80%	6,000
Total	1,65,300			Total	1,65,300	Total	1,63,800

Cost per Equivalent Units
COST		Material	Conversion	TOTAL
Beginning WIP Inventory Cost		$             1,155	$             561	$                        1,716
Cost incurred during period		$           60,006	$       33,837	$                      93,843
Total Cost to be accounted for		$           61,161	$       34,398	$                      95,559
Total Equivalent Units		1,65,300	1,63,800
Cost per Equivalent Units		$                0.37	$            0.21

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Material	$                   0.37	7,500	$         2,775	$                  1,57,800	$       58,386
Conversion	$                   0.21	6,000	$         1,260	$                  1,57,800	$       33,138
TOTAL	$              95,559	TOTAL	$         4,035	TOTAL	$       91,524

Reconciliation and Cost report
Cost to be accounted for
Beginning Work In Progress:
Material	$           1,155.00
Conversion	$              561.00	$ 1,716.00
Cost incurred during period:
Material	$        60,006.00
Conversion	$        33,837.00	$ 93,843.00
Total Cost to be accounted for				$        95,559.00
Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	1,57,800	$                0.37	$    58,386.00
Conversion	1,57,800	$                0.21	$    33,138.00
				$        91,524.00
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Material	7,500	$                0.37	$      2,775.00
Conversion	6,000	$                0.21	$      1,260.00
				$           4,035.00
Total Cost accounted for				$        95,559.00