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	3,900	100	%		80	%
Work in process inventory, March 31	7,000	100	%		80	%
Pulping cost in work in process inventory, March 1				$	1,755
Conversion cost in work in process inventory, March 1				$	1,053
Units transferred to the next production department					150,500
Pulping cost added during March				$	72,270
Conversion cost added during March				$	47,338

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

UNITS TO ACCOUNT FOR:
Beginning Work in Process units			3,900
Add: Units Started in Process			1,53,600
Total Units to account for:			1,57,500
UNITS TO BE ACCOUNTED FOR:
Units completed				150500
Ending Work in Process			7,000
Total Units to be accounted for:		1,57,500
Equivalent Units:
				Material Cost	Conversion
			UNITS	% Completion	Units	% Completion	Units
Units completed		150500	100%	1,50,500	100%	1,50,500
Ending Work in Process	7000	100%	7,000	80%	5,600
Total Equivalent units	157500		1,57,500		1,56,100
TOTAL COST TO ACCOUNT FOR:
				Material		Conversion
Beginning work in Process		1,755		1,053
Cost Added during May		72,270		47,338
Total Cost to account for:		74,025		48,391
Total Cost to account for:				1,22,416
COST PER EQUIVALENT UNIT:
				Material		Conversion
Total cost added during the year	74,025		48,391
Equivalent Units			1,57,500		1,56,100
Cost per Equivalent unit		0.47		0.31
TOTAL COST ACCOUNTED FOR:
Ending Work in process units (7000 units)
				Equivalent unit	Cost per EU	Total Cost
Material				7,000	0.47	3290
Conversion Cost			5,600	0.31	1736
Total Cost of Units completed and transferred out:		5026
Units completed and transferred out (150500 units)
				Equivalent unit	Cost per EU	Total Cost
Material				1,50,500	0.47	70735
Conversison Cost			1,50,500	0.31	46655
Total cost of Ending Work in process:			1,17,390
Cost Reconciliation Statement
Beginning WIP cost (1755+1053)	2808
Current cost incurred (72270+47338)	119608
Total cost to account for		122416
Cost of units completed		117390
Cost of ending work in process		5026
Total cost accounted for		122416