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	4,100	100	%		80	%
Work in process inventory, March 31	6,500	100	%		60	%
Pulping cost in work in process inventory, March 1				$	1,189
Conversion cost in work in process inventory, March 1				$	615
Units transferred to the next production department					139,300
Pulping cost added during March				$	44,009
Conversion cost added during March				$	26,593

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

• Requirements 1, 2, 3 and 4

	Pulping	Conversion
Equivalent units of production	145,800	143,200
	Pulping	Conversion
Cost per Equivalent units	$                         0.31	$                              0.19
	Pulping	Conversion	Total
Cost of ending WIP Inventory	$                 2,015.00	$                          741.00	$                         2,756.00
	Pulping	Conversion	Total
Cost of units completed & transferred out	$               43,183.00	$                    26,467.00	$                       69,650.00

• Requirement 5

Costs to be accounted for:
Cost of Beginning WIP Inventory	$              1,804.00
Cost added to production during the period	$           70,602.00
Total Cost to be accounted for	$           72,406.00
Costs accounted for as follows:
Cost of units transferred out	$           69,650.00
Cost of Ending WIP Inventory	$              2,756.00
Total Cost accounted for	$           72,406.00

--Workings

EUP - Weighted Average Method	Units	% Pulping	EUP Pulping	% Conversion	EUP - Conversion
Units TRANSFERRED	139,300	100%	139,300	100%	139,300
Units of ENDING WIP	6,500	100%	6,500	60%	3,900
Equivalent Units of Production			145,800		143,200
COST per EUP			Pulping		Conversion
Cost of Beginning WIP			$             1,189.00		$                                        615.00
Cost incurred during the period			$          44,009.00		$                                  26,593.00
Total Costs		Costs	$          45,198.00	Costs	$                                  27,208.00
Equivalent units of production		EUP	145,800	EUP	143,200
Cost per EUP			$              0.31000		$                                      0.19000
TOTAL COST ACCOUNTED FOR
Cost of Units Transferred Out	EUP	Cost per EUP	Total Cost
- Pulping	139,300	$                      0.31	$          43,183.00
- Conversion	139,300	$                      0.19	$          26,467.00
Total Cost transferred Out				$              69,650.00
Cost of ending WIP	EUP	Cost per EUP	Total Cost
- Pulping	6,500	$                      0.31	$             2,015.00
- Conversion	3,900	$                      0.19	$                741.00
Total cost of ending WIP				$                 2,756.00
Total costs accounted for					$                                  72,406.00