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 2,800 100 % 80 % Work in process inventory, March 31 6,000 100 % 75 % Pulping cost in work in process inventory, March 1 $ 1,470 Conversion cost in work in process inventory, March 1 $ 980 Units transferred to the next production department 158,000 Pulping cost added during March $ 88,730 Conversion cost added during March $ 62,395 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

Solution 1:

Computation of Equivalent unit of Production - Weighted Average ( Drying Department)
Particulars	Physical Units	Prior Department	Conversion
Unit completed & Transferred out	158000	158000	158000
Closing WIP:	6000
Pulping (100%)		6000
Conversion (75%)			4500
Equivalent units of production	164000	164000	162500

Solution 2:

Computation of Cost per equivalent unit of Production - Weighted Average (Drying Department))
Particulars	Prior Department	Conversion
Opening WIP	$1,470.00	$980.00
Cost Added during March	$88,730.00	$62,395.00
Total cost to be accounted for	$90,200.00	$63,375.00
Equivalent units of production	164000	162500
Cost per Equivalent unit	$0.55	$0.39

Solution 3 & 4:

Computation of Cost of ending WIP and units completed & transferred out - Weighted Average (Drying Department)t)
Particulars	Prior Department	Conversion	Total
Equivalent unit of Ending WIP	6000	4500
Cost per equivalent unit	$0.55	$0.39
Cost of Ending WIP (Equivalent unit * Cost per equivalent unit)	$3,300	$1,755	$5,055
Units completed and transferred	158000	158000
Cost of units completed & Transferred (Unit completed * cost per equivalent unit)	$86,900	$61,620	$148,520

Solution 5:

Production cost report - Weighted Average - Drying Department)
Particulars	Amount
Costs to be accounted for:
Cost of beginning WIP inventory ($1,470 + $980)	$2,450.00
Cost added to production ($88,730 + $62,395)	$151,125.00
Total Cost to be accounted for	$153,575.00
Costs accounted for as follows:
Cost of unit transferred out	$148,520
Ending WIP:
Pulping	$3,300
Converison	$1,755
Total cost accounted for	$153,575