Question

xercise 4-11 Comprehensive Exercise; Second Production Department-Weighted-Average Method [LO4-2, LO4-3, LO4-4, LO4-5]

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	3,500	100	%		80	%
Work in process inventory, March 31	5,500	100	%		70	%
Pulping cost in work in process inventory, March 1				$	1,645
Conversion cost in work in process inventory, March 1				$	1,050
Units transferred to the next production department					154,900
Pulping cost added during March				$	78,555
Conversion cost added during March				$	52,925

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
					units	%	pulping	%	CC
	Completed & transferred				154,900	100%	154,900	100%	154,900
	work in process inventory,March 31				5,500	100%	5,500	70%	3850
	Equivalent units of production						160,400		158,750
2)	cost per Equivalent units
						pulping	CC	total
	Beginning work in process					1,645	1,050	2,695
	cost added during the year					78,555	52,925	131,480
	total cost					80,200	53,975	134,175
	equivalent units					160,400	158,750
	cost per EUP					0.5	0.34	0.84
3)	Cost of ending work in proces
	pulping		5500	*.5		2750
	Conversion		3850	*.34		1309
	Cost of ending work in proces							4059
4)	Cost of units transferred
	pulping		154,900	*.5=		77450
	conversion		154,900	*.34		52666		130116
5)	CostReconcilation report
	cost to be accounted
	Beginning work in process					2,695
	cost added during the year					131,480
	cost to be accounted					134,175
	cost accounted for
	transferred cost					130,116
	ending wip cost					4059
	cost accounted for					134,175