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 4,100 100 % 80 % Work in process inventory, March 31 8,000 100 % 75 % Pulping cost in work in process inventory, March 1 $ 1,517 Conversion cost in work in process inventory, March 1 $ 779 Units transferred to the next production department 140,300 Pulping cost added during March $ 56,320 Conversion cost added during March $ 32,870 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

1

Equivalent units of production:

	Pulping	Conversion
Transferred to next department	140,300	140,300
Equivalent units in ending work in process inventory:
Pulping: 8,000 units × 100% complete	8,000
Conversion: 8,000 units × 75% complete		6,000
Equivalent units of production	148,300	146,300

	Pulping	Conversion
Equivalent unit of production	148,300	146,300

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2

Cost per equivalent unit:

	Pulping	Conversion
Cost of beginning work in process	1517	779
Cost added during the period	56320	32,870
Total cost (a)	57837	33649
Equivalent units of production (b)	148,300	146,300
Cost per equivalent unit (a) ÷ (b)	0.39	0.23

	Pulping	Conversion
Cost per Equivalent Unit	0.39	0.23

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3& 4

Cost of ending work in process inventory and units transferred out:

	Pulping	Conversion	Total
Ending work in process inventory:
Equivalent units	8,000	6,000
Cost per equivalent unit	0.39	0.23
Cost of ending work in process inventory	3120	1380	4500
Units completed and transferred out:
Units transferred to the next department	140,300	140,300
Cost per equivalent unit	0.39	0.23
Cost of units completed and transferred out	54717	32269	86986

	Pulping	Conversion	Total
Cost of ending work in process inventory	3120	1380	4500
Cost of units completed and transferred out	54717	32269	86986

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5

cost reconciliation report

cost reconciliation report
Costs to be accounted for:
Cost of beginning work in process	2296
Costs added to production during the period	89190
Total cost to be accounted for	91486
Costs accounted for as follows:
Cost of ending work in process inventory	4500
Cost of units completed and transferred out	86986
Total cost accounted for	91486