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	3,400	100	%		80	%
Work in process inventory, March 31	5,200	100	%		75	%
Pulping cost in work in process inventory, March 1				$	1,581
Conversion cost in work in process inventory, March 1				$	986
Units transferred to the next production department					153,900
Pulping cost added during March				$	76,378
Conversion cost added during March				$	51,088

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

	Pulping	Conversion
Unit transferred out	153900	153900
Ending WIP	5200	5200*75% = 3900
Equivalent unit	159100	157800

2) Cost per equivalent unit

	Pulping	Conversion
Beginning WIP	1581	986
Cost added	76378	51088
Total Cost	77959	52074
Equivalent unit	159100	157800
Cost per Equivalent unit	0.49	0.33

3) Cost of ending WIP

	Pulping	Conversion	Total
Cost of Ending WIP	5200*.49 = 2548	3900*.33 = 1287	3835

4) Cost of unit transferred out

	Pulping	Conversion	Total
Cost of Unit transferred out	75411	50787	126198

5) Cost reconciliation

Cost to be accounted for
Beginning WIP	2567
Cost added	127466
Total cost to be accounted for	130033
Cost accounted as
Cost of unit transferred out	126198
Cost of ending WIP	3835
Total cost accounted as	130033