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	3,400	100	%		80	%
Work in process inventory, March 31	6,800	100	%		75	%
Pulping cost in work in process inventory, March 1				$	1,445
Conversion cost in work in process inventory, March 1				$	850
Units transferred to the next production department					147,900
Pulping cost added during March				$	68,170
Conversion cost added during March				$	43,520

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	Computation of Equivalent unit of Production -Drying Department ( in Unit)
	Particulars	Material	Conversion
	unit Transferred to Next production department (i)	147900	147900
	Closing WIP	6800	6800
	% of Completion	100%	75%
	Equivalent completed unit closing WIP (ii)	6800	5100
	Equivalent unit of Production ( i+ii-iii)	154700	153000
2	Computation of Cost per equivalent unit of Production -Drying Department
	Particulars	Material	Conversion
	Opening WIP	$1,445.00	$850.00
	Cost Added during March	$68,170.00	$43,520.00
	Total cost to be accounted for	$69,615.00	$44,370.00
	Equivalent units of production	154700	153000
	Cost per Equivalent unit	$0.45	$0.29
3	Computation of Cost of ending WIP a - Drying Department
	Particulars	Material	Conversion	Total
	Equivalent unit of Ending WIP	6800	5100
	Cost per equivalent unit	$0.45	$0.29
	Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$3,060	$1,479	$4,539
4	Computation of Cost of units completed & transferred out - Drying Department
	Particulars	Material	Conversion	Total
	Units completed and transferred	147900	147900
	Cost per equivalent unit	$0.45	$0.29
	Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$66,555.00	$42,891.00	$109,446
	Cost Reconciliation - Drying Department
	Particulars	Amount
	Costs to be accounted for:
	Cost of beginning WIP inventory (1445+850)	$2,295.00
	Cost added to production ($68170 + $43520)	$111,690.00
	Total Cost to be accounted for	$113,985.00
	Costs accounted for as follows:
	Cost of unit transferred out	$109,446
	Ending WIP:
	Material	$3,060
	Converison	$1,479
	Total cost accounted for	$113,985