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	6,000	100	%		75	%
Pulping cost in work in process inventory, March 1				$	1,545
Conversion cost in work in process inventory, March 1				$	1,020
Units transferred to the next production department					156,900
Pulping cost added during March				$	86,421
Conversion cost added during March				$	60,312

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

Drying Department's equivalent units of production for pulping and conversion in March

		Units
Reconciliation of Units
A	Opening WIP	3,000
B	Introduced	159,900
C=A+B	TOTAL	162,900
D	Transferred	156,900
E=C-D	Closing WIP	6,000

Statement of Equivalent Units
		Pulping		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	156,900	100%	156,900	100%	156,900
Closing WIP	6,000	100%	6,000	75%	4,500
Total	162,900	Total	162,900	Total	161,400

Requirement 2

Drying Department's cost per equivalent unit for pulping and conversion in March

Cost per Equivalent Units
COST	Pulping	Conversion Cost	TOTAL
Beginning WIP Inventory Cost	$        1,545.00	$            1,022.00	$            2,567.00
Cost incurred during period	$     86,421.00	$         60,312.00	$       146,733.00
Total Cost to be accounted for	$     87,966.00	$         61,334.00	$       149,300.00
Total Equivalent Units	162,900	161,400
Cost per Equivalent Units	$ 0.54	$   0.38

Requirement 3

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

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP
		Units	Cost Allocated
Pulping	$                        0.54	6,000	$            3,240.00
Conversion Cost	$                        0.38	4,500	$            1,710.06
TOTAL	$           149,300.00	TOTAL	$            4,950.06

Requirement 4

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

Statement of cost
Cost	Equivalent Cost/unit	Transferred
		Units	Cost Allocated
Pulping	$   0.54	156,900	$         84,726.00
Conversion Cost	$     0.38	156,900	$         59,623.94
TOTAL	$ 149,300.00	TOTAL	$       144,349.94

Requirement 5

Reconciliation

Reconciliation
Cost to be accounted for
Beginning Work In Progress:
Pulping	$                1,545.00
Conversion Cost	$                1,022.00	$        2,567.00
Cost incurred during period:
Pulping	$              86,421.00
Conversion Cost	$              60,312.00	$   146,733.00
Total Cost to be accounted for				$       149,300.00
Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Pulping	156,900	$ 0.54	$         84,726.00
Conversion Cost	156,900	$   0.38	$         59,623.94
				$       144,349.94
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Pulping	6,000	$   0.54	$            3,240.00
Conversion Cost	4,500	$   0.38	$            1,710.06
				$            4,950.06
Total Cost accounted for				$       149,300.00