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	4,100	100	%		80	%
Work in process inventory, March 31	8,000	100	%		75	%
Pulping cost in work in process inventory, March 1				$	1,517
Conversion cost in work in process inventory, March 1				$	779
Units transferred to the next production department					140,300
Pulping cost added during March				$	56,320
Conversion cost added during March				$	32,870

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 unit

	Physical Unit	%	EUP-Pulping	%	EUP-Conversion
Unit completed and transferred out	140300	100%	140300	100%	140300
Unit Ending work in process	8000	100%	8000	75%	6000
Total Equivalent unit	148300		148300		146300

2) Compute cost per equivalent unit

	Pulping	Conversion
Beginning work in process	1517	779
Cost added	56320	32870
Total Cost	57837	33649
Equivalent unit	148300	146300
Cost per equivalent unit	0.39	0.23

3) cost of ending work in process

	Material	Conversion	Total
Cost of ending work in process	8000*.39 = 3120	6000*.23 = 1380	4500

4) Cost of unit completed and transferred out

	Material	Conversion	Total
Cost of units completed and transferred out	140300*.39 = 54717	140300*.23 = 32269	86986

5) Cost reconciliation report

Cost to be accounted for
Beginning work in process	2296
Cost added	89190
Total Cost to be accounted for	91486
Cost accounted as
Cost of unit transferred out	86986
Cost of ending work in process	4500
Total Cost accounted as	91486