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	3,500	100	%		80	%
Work in process inventory, March 31	7,500	100	%		60	%
Pulping cost in work in process inventory, March 1				$	1,085
Conversion cost in work in process inventory, March 1				$	350
Units transferred to the next production department					134,000
Pulping cost added during March				$	45,610
Conversion cost added during March				$	23,195

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) Equivalent unit

	EUP-Pulping	EUP-Conversion
Unit transferred out	134000	134000
Ending WIP	7500	7500*60% = 4500
Equivalent unit	141500	138500

2) Cost per equivalent unit

	Pulping	Conversion
Beginning WIP	1085	350
Cost added	45610	23195
Total Cost	46695	23545
Equivalent unit	141500	138500
Cost per equivalent unit	0.33	0.17

3) Cost of ending WIP

	Pulping	Conversion	Total
cost of ending WIP	7500*.33 = 2475	765	3240

4) Cost of unit transferred out

	Pulping	Conversion	Total
Cost of unit transferred out	44220	22780	67000

5) Cost reconciliation

Cost to be accounted for
Beginning work in process	1435
Cost added	68805
Total Cost to be accounted for	70240
Cost accounted as
Cost of unit transferred out	67000
Cost of ending WIP	3240
Total Cost accounted as	70240