Question

Exercise 5-11 Comprehensive Exercise; Second Production Department-Weighted-Average Method [LO5-2, LO5-3, LO5-4, LO5-5]

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	2,500	100	%		80	%
Work in process inventory, March 31	7,600	100	%		75	%
Pulping cost in work in process inventory, March 1				$	1,050
Conversion cost in work in process inventory, March 1				$	600
Units transferred to the next production department					145,000
Pulping cost added during March				$	66,094
Conversion cost added during March				$	41,596

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
	Physical units	Pulping		Conversion
Units completed and transferred	145,000	145,000	100%	145,000	100%
Ending work in process	7,600	7,600	100%	5,700	75%
Total equivalent units		152,600		150,700

2.

	Pulping	Conversion
Beginning work in process	$1,050	$600
Cost added during March	66,094	41,596
Total cost	$67,144	$42,196
Equivalent units	152,600	150,700
Cost per equivalent unit	$0.44	$0.28

3.

	Pulping	Conversion	Total
Cost of ending work in process	$3,344 (7,600*$0.44)	$1,596 (5,700*$0.28)	$4,940

4.

	Pulping	Conversion	Total
Cost of unit transferred out	$63,800 (145,000*$0.44)	$40,600 (145,000*$0.28)	$104,400

5.

DRYING DEPARTMENT Cost Reconciliation
Cost to be accounted for:
Beginning work in process ($1,050+600)	$1,650
Cost added during March ($66,094+41,596)	107,690
Total cost to be accounted for	$109,340
Cost accounted for:
Cost of units transferred out	104,400
Cost of ending work in process	4,940
Total cost accounted for	$109,340