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 3,000 100 % 80 % Work in process inventory, March 31 8,500 100 % 80 % Pulping cost in work in process inventory, March 1 $ 1,155 Conversion cost in work in process inventory, March 1 $ 630 Units transferred to the next production department 141,800 Pulping cost added during March $ 60,468 Conversion cost added during March $ 36,520 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.

	Physical Units	Equivalent Units
		Pulping	Conversion
Units completed and transferred	141800	141800	141800
Ending work in process	8500	8500	6800
Total	150300	150300	148600

2.

	Pulping	Conversion	Total
Cost of beginning work in process	1155	630	1785
Costs added during March	60468	36520	96988
Total costs $	61623	37150	98773
÷ Equivalent units	150300	148600
Cost per equivalent unit $	0.41	0.25

3.

Cost of ending work in process:
Pulping (8500 x $0.41)	3485
Conversion (6800 x $0.25)	1700
Total cost of ending work in process $	5185

4.

Cost of units transferred out to Finishing department:
Pulping (141800 x $0.41)	58138
Conversion (141800 x $0.25)	35450
Total cost of units transferred out $	93588

5.

Cost Reconciliation
Costs to be accounted for:
Cost of beginning work in process	1785
Costs added during March	96988
Total cost to be accounted for $	98773
Costs accounted for:
Cost of ending work in process	5185
Cost of units transferred out	93588
Total cost accounted for $	98773