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 3,200 8,000 Work in process inventory, March 1 Work in process inventory, March 31 Pulping cost in work in process inventory, March 1 Conversion cost in work in process inventory, March 1 Units transferred to the next production department Pulping cost added during March Conversion cost added during March Percent Completed Pulping Conversion 100% 808 100% 75% $ 1,584 $ 1,024 152,000 $ 81,616 $ 55,856 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

	Physical unit	EUP-Pulping	EUP-Conversion
Unit transferred out	152000	152000	152000
Ending work in process	8000	8000	6000
Equivalent unit	160000	160000	158000

2) cost per equivalent unit

	Pulping	Conversion
Beginning WiP	1584	1024
Cost added	81616	55856
Total Cost	83200	56880
Equivalent unit	160000	158000
Cost per equivalent unit	0.52	0.36

3) cost of ending work in process

	Pulping	Conversion	Total
Cost of ending work in process	4160	2160	6320

4) cost of unit transferred out

	Pulping	Conversion	Total
Cost of unit transferred out	79040	54720	133760

5) Cost reconciliation

Cost to be accounted for
Beginning WIP	2608
Cost added	137472
Total Cost to be accounted for	140080
Cost accounted as
Cost of unit transferred out	133760
Cost of ending WIP	6320
Total Cost accounted as	140080