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	3,200	100	%		80	%
Work in process inventory, March 31	8,000	100	%		75	%
Pulping cost in work in process inventory, March 1				$	1,584
Conversion cost in work in process inventory, March 1				$	1,024
Units transferred to the next production department					152,000
Pulping cost added during March				$	81,616
Conversion cost added during March				$	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

Solution

	Pulping	Conversion
Equivalent Units of Production	1,60,000	1,58,000

.

	Pulping	Conversion
Cost per equivalent Unit	$                    0.52	$                   0.36

.

	Pulping	Conversion	Total
Ending Inventory	$ 4,160	$ 2,160	$ 6,320

..

	Pulping	Conversion	Total
Units Completed and transferred	$ 79,040	$ 54,720	$ 133,760

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 2,608
Cost incurred during period	$ 137,472
Total cost to be accounted for	$ 140,080
Costs accounted for as follows:
Cost of Units Transferred Out	$ 133,760
Cost of Ending Wip	$ 6,320
Total cost accounted for	$ 140,080

Working

Statement of Equivalent Units(Weighted average)
				Pulping		Conversion cost
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred	1,52,000			100%	1,52,000	100%	1,52,000
Closing WIP	8,000			100%	8,000	75%	6,000
Total	1,60,000			Total	1,60,000	Total	1,58,000

.

Cost per Equivalent Units (Weighted average)
COST		Pulping	Conversion cost	TOTAL
Beginning WIP Inventory Cost		$ 1,584	$ 1,024	$ 2,608
Cost incurred during period		$ 81,616	$ 55,856	$ 137,472
Total Cost to be accounted for		$ 83,200	$ 56,880	$ 140,080
Total Equivalent Units		1,60,000	1,58,000
Cost per Equivalent Units		$                   0.52	$                     0.36	$                0.88

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Pulping	$ 0.52	8,000	$             4,160.00	1,52,000	$ 79,040
Conversion cost	$ 0.36	6,000	$             2,160.00	1,52,000	$          54,720.00
TOTAL	$ 140,080	TOTAL	$ 6,320	TOTAL	$ 133,760