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	5,500	100	%		70	%
Pulping cost in work in process inventory, March 1				$	1,645
Conversion cost in work in process inventory, March 1				$	1,050
Units transferred to the next production department					154,900
Pulping cost added during March				$	78,555
Conversion cost added during March				$	52,925

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. Computation of equivalent units of production for pulping and conversion in March is as follows :

   	Pulping	Conversion
   Units transferred to next production department	154900	154900
   Equivalent units in ending work in process inventory :
   Pulping : 5500 units x 100%	5500
   Conversion : 5500 units x 70%		3850
   Equivalent units of production	160400	158750

2. Cost per equivalent unit for pulping and conversion in March is as follows :

   	Pulping	Conversion
   Cost of beginning Work in progress	$1645	$1050
   Cost added during March	$78555	$52925
   Total Cost (a)	$80200	$53975
   Equivalent Units of Production (b)	160400	158750
   Cost per equivalent unit [(a) / (b)]	$0.50	$0.34

3. Cost of ending Work in progress inventory for pulping, conversion and in total for March is as follows :

   	Pulping	Conversion	Total
   Ending work in process inventory :
   Equivalent Units	5500	3850
   Cost per equivalent unit	$0.50	$0.34
   Cost of ending work in process inventory	$2750	$1309	$4059

4. Cost of units transferred out to the Finishing Department for pulping, conversion and in total of March is as follows

   	Pulping	Conversion	Total
   Units completed and transferred out :
   Units transferred to the next department	154900	154900
   Cost per equivalent unit	$0.50	$0.34
   Cost of units completed and transferred out	$77450	$52666	$130116

5. Cost Reconciliation Report for the month of March is as follows :

   Cost to be accounted for :
   Cost of beginning work in process inventory (1645 + 1050)	$2695
   Costs added to production during the period (78555 + 52925)	$131480
   Total cost to be accounted for	$134175
   Costs accounted for as follows :
   Cost of ending work in process inventory	$4059
   Cost of units completed and transferred out	$130116
   Total cost accounted for	$134175