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	4,000	100	%		75	%
Pulping cost in work in process inventory, March 1				$	2,295
Conversion cost in work in process inventory, March 1				$	1,360
Units transferred to the next production department					166,400
Pulping cost added during March				$	116,985
Conversion cost added during March				$	73,176

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				166,400	100%	166,400	100%	166,400
	work in process inventory,March 31				4,000	100%	4,000	75%	3000
	Equivalent units of production						170,400		169,400
2)	cost per Equivalent units
						pulping	CC	total
	Beginning work in process					2,295	1,360	3,655
	cost added during the year					116,985	73,176	190,161
	total cost					119,280	74,536	193,816
	equivalent units					170,400	169,400
	cost per EUP					0.7	0.44	1.14
3)	Cost of ending work in proces
	pulping		4,000	*	0.7	=	2800
	Conversion		3000	*	0.44	=	1320
	Cost of ending work in proces							4120
4)	Cost of units transferred
	pulping		166,400	*	0.7	=	116480
	conversion		166,400	*	0.44	=	73216
	Cost of units transferred							189696
5)	CostReconcilation report
	cost to be accounted
	Beginning work in process					3,655
	cost added during the year					190,161
	cost to be accounted					193,816
	cost accounted for
	transferred cost					189,696
	ending wip cost					4120
	cost accounted for					193,816