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

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

	Physical unit	%	EUP-Pulping	%	EUP-conversion
Units transferred out	147900	100%	147900	100%	147900
Ending work in process	6800	100%	6800	75%	5100
Total	154700		154700		153000

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

	Pulping	Conversion
Beginning work in process	1445	850
Cost added during period	68170	43520
Total cost	69615	44370
Equivalent unit	154700	153000
Cost per equivalent unit	0.45	0.29

3. Compute the Drying Department's cost of ending work in process inventory for pulping, conversion, and in total for March.

	Pulping	Conversion	Total
Cost of ending work in process	6800*.45=3060	5100*.29=1479	4539

4. Compute the Drying Department's cost of units transferred out to the Finishing Department for pulping, conversion, and in total in March.

	Pulping	Conversion	Total
cost of units transferred out	147900*.45=66555	147900*.29=42891	109446

5. Prepare a cost reconciliation report for the Drying Department for March.

Cost to be accounted for
Beginning work in process	2295
Cost added during period	111690
Total Cost to be accounted for	113985
Cost accounted as
Cost of units transferred out	109446
Ending work in process	4539
Total Cost accounted as	113985