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:

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

	Product Cost Report as per Weighted Average method
Requirement 1
	Statement of equivalent production
							Pulping		Conversion Costs
	Particulars		Input	Particulars		Output	%	Equivalent Units	%	Equivalent Units
	Beginning WIP		4100	Completed & transferred		140300	100	140300	100	140300
	Addition	(balancing)	144200	Ending WIP		8000	100	8000	75	6000
			148300	Total		148300		148300		146300
Requirement 2
	Cost element		Beginning work In process costs	Cost for the month	Total costs	Equivalent units	Cost per Equivalent units
	Pulping		1517	56320	57837	148300	0.390
	Conversion costs*		779	32870	33649	146300	0.230
		Total			91486
Requirement 3
	Completed/Transferred			Units	Costs	Total costs
	Pulping			140300	0.390	54717.00
	Conversion Costs			140300	0.230	32269.00
	Cost of goods Manufactured					86986
Requirement 4
	Ending Inventory			Units	Costs	Total costs
	Pulping			8000	0.390	3120
	Conversion Costs			6000	0.230	1380
	Cost of ending Inventory					4500
Requirment 5
	Reconciliation statement
	Total Cost allocated					91486
	Total cost incurred as per requirement 2					91486
		Difference				0