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	3,000	100	%		80	%
Work in process inventory, March 31	7,000	100	%		75	%
Pulping cost in work in process inventory, March 1				$	885
Conversion cost in work in process inventory, March 1				$	360
Units transferred to the next production department					133,900
Pulping cost added during March				$	44,203
Conversion cost added during March				$	21,904

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

Solution

	Pulping	Conversion
Equivalent Units of Production	140,900	139,150

.

	Pulping	Conversion
Cost per equivalent Unit	$ 0.32	$ 0.16

.

	Pulping	Conversion	Total
Ending Inventory	$ 2,240	$ 840	$ 3,080

.

	Pulping	Conversion	Total
Units Completed and transferred	$ 42,848	$ 21,424	$ 64,272

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 1,245
Cost incurred during period	$ 66,107
Total cost to be accounted for	$ 67,352
Costs accounted for as follows:
Cost of Units Transferred Out	$ 64,272
Cost of Ending Wip	$ 3,080
Total cost accounted for	$ 67,352

Working

Reconciliation of Units
A	Beginning WIP	3,000
B	Introduced	137,900
C=A+B	TOTAL	140,900
D	Transferred out	133,900
E=C-D	Ending WIP	7,000

.

Statement of Equivalent Units(Weighted average)
				Pulping		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	133,900			100%	133,900	100%	133,900
Ending WIP	7,000			100%	7,000	75%	5,250
Total	140,900			Total	140,900	Total	139,150

.

Cost per Equivalent Units (Weighted average)
COST		Pulping	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 885	$ 360	$ 1,245
Cost incurred during period (B)		$ 44,203	$ 21,904	$ 66,107
Total Cost to be accounted for (C=A+B)		$ 45,088	$ 22,264	$ 67,352
Total Equivalent Units(D)		140,900	139,150
Cost per Equivalent Units (E=C/D)		$                   0.32	$                     0.16	$                        0.48

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Pulping	$ 0.32	7,000	$             2,240.00	133,900	$          42,848.00
Conversion	$ 0.16	5,250	$                840.00	133,900	$          21,424.00
TOTAL	$ 67,352	TOTAL	$ 3,080	TOTAL	$ 64,272