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	6,500	100	%		60	%
Pulping cost in work in process inventory, March 1				$	1,189
Conversion cost in work in process inventory, March 1				$	615
Units transferred to the next production department					139,300
Pulping cost added during March				$	44,009
Conversion cost added during March				$	26,593

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

	Pulping	Conversion
Unit transferred out	139300	139300
Ending work in process	6500	6500*60% = 3900
Equivalent unit of production	145800	143200

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

	Pulping	Conversion
Beginning WIP	1189	615
Cost added	44009	26593
Total Cost	45198	27208
Equivalent unit of production	145800	143200
Cost per equivalent unit	0.31	0.19

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

	Pulping	Conversion	Total
Cost of ending work in process	6500*.31 = 2015	6500*60%*.19 = 741	2756

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

	Pulping	Conversion	Total
Cost of units transferred out	139300*.31 =43183	139300*.19 = 26467	69650

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

Cost to be accounted for
Beginning WIP	1804
Cost added	70602
Total Cost to be accounted for	72406
Cost accounted as
Cost of units transferred out	69650
Cost of ending work in process	2756
Total Cost accounted as	72406