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	3,500	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

Answer :

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

	Pulping	Conversion
Unit transferred out	154900	154900
Ending WIP	5500 ( 5500*100%)	3850 ( 5500*70%)
Equivalent unit	160400	158750

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

	Pulping	Conversion
Opening wip cost	$ 1645	$ 1050
Cost added	$ 78555	$ 52925
Total cost	$ 80200	$ 53975

Equivalent unit	160400	158750
cost per equivalent unit	$ 0.50	$ 0.34

3. Drying Department's cost of ending work in process inventory

	Pulping	Conversion	Total
Cost of Ending WIP	$ 2750 ( 5500* $ .50)	$ 1309 ( 3850*$ .340)	$ 4059

4.Drying Department's cost of units transferred out to the Finishing Department

	Pulping	Conversion	Total
Cost of Units Transferred out	$ 77450 ( 154900* $.50)	$ 52666 ( 154900*.34)	$ 130116

5. cost reconciliation report

Costs to be accounted for :
Opening WIP ( $ 1645 + $ 1050 )	$ 2695
Cost Added ( $ 78555 + $ 52925)	$ 131480
Total Costs to be accounted for	$ 134175
Cost allocated
Cost of Units Transferred out	$ 130116
Cost of Ending WIP	$ 4059
Total Cost allocated	$ 134175