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

Requirement 1

Reconciliation of Units
A	Opening WIP	3,400
B	Introduced	1,51,300
C=A+B	TOTAL	1,54,700
D	Transferred	1,47,900
E=C-D	Closing WIP	6,800

Statement of Equivalent Units
		Pulping		Conversion Cost
	Units	Complete %	Equivalent units	Complete %	Equivalent units
Transferred	1,47,900	100%	1,47,900	100%	1,47,900
Closing WIP	6,800	100%	6,800	75%	5,100
Total	1,54,700	Total	1,54,700	Total	1,53,000

Requirement 2

Cost per Equivalent Units
COST		Pulping	Conversion Cost	TOTAL
Beginning WIP Inventory Cost		$               1,445	$              850	$                 2,295
Cost incurred during period		$             68,170	$        43,520	$           1,11,690
Total Cost to be accounted for		$             69,615	$        44,370	$           1,13,985
Total Equivalent Units		1,54,700	1,53,000
Cost per Equivalent Units		$                 0.45	$             0.29

Requirement 3 and 4

	Material	Conversion	Total
Units Completed	$    66,555	$             42,891	$    1,09,446
Ending Inventory	$      3,060	$               1,479	$          4,539

Statement of cost
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Pulping	$   0.45	6,800	$    3,060	$    1,47,900	$       66,555
Conversion Cost	$   0.29	5,100	$    1,479	$    1,47,900	$       42,891
		TOTAL	$    4,539	TOTAL	$   1,09,446

Requirement 5

Reconciliation and Cost report
Cost to be accounted for
Beginning Work In Progress:
Pulping	$         1,445.00
Conversion Cost	$            850.00	$ 2,295.00
Cost incurred during period:
Pulping	$      68,170.00
Conversion Cost	$      43,520.00	$ 1,11,690.00
Total Cost to be accounted for				$   1,13,985.00
Cost accounted for
Cost of Units transferred	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Pulping	1,47,900	$                 0.45	$     66,555.00
Conversion Cost	1,47,900	$                 0.29	$     42,891.00
				$   1,09,446.00
Cost of ending WIP	Equivalent Units	Cost per Equivalent Units	Cost accounted for
Pulping	6,800	$                 0.45	$       3,060.00
Conversion Cost	5,100	$                 0.29	$       1,479.00
				$         4,539.00
Total Cost accounted for				$   1,13,985.00