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

1) Computation the Drying Department's equivalent units of production using for pulping andweighted average method conversion in March :

	equivalent units
particular	units	pulping	conversion costs
		units	% of completion	units	% of completion
Units completed and transferred to the next production department	139300	139300	100	139300	100
ending wip	6500	6500	100	3900	60
total	145800	145800		143200

2) Compute the Drying Department's cost per equivalent unit for pulping and conversion in March :

particular	costs	total	equibvalent units	cost per equivalent
pulping :
beginning wip	$1189
added during the month	$44009
total pulping		$45198	145800	$45198/145800 = $0.31
conversion costs :
beginning wip	$615
added during the month	$26593
total conversion costs		$27208	143200	$27208/143200 = $0.19

3) Compute the Drying Department's cost of ending work in process inventory for pulping, conversion, and in total for March :

particular	equivalent units	cost per equivalent unit	total cost
ending wip :
pulping	6500	$0.31	6500 x $0.31 = $2015
conversion cost	3900	$0.19	3900 x $0.19 = $741
total			$2756

4) Compute the Drying Department's cost of units transferred out to the Finishing Department for pulping, conversion, and in total in March :

particular	equivalent units	cost per equivalent unit	total cost
cost of units transferred out to the Finishing Department :
pulping	139300	$0.31	139300 x $0.31 = $43183
conversion cost	139300	$0.19	139300 x $0.19 = $26467
total			$69650

5) Preparatio of a cost reconciliation report for the Drying Department for March :

cost reconciliation
total cost to be accounted for :
cost accounted as follows :-
cost of units completed and transferred out :
pulping	139300 x $0.31 = $43183
conversion costs	139300 x $0.19 = $26467
total cost of units completed and transferres out	$69650	$69650
cost of ending inventory :
pulping	6500 x $0.31 = $2015
cnversion costs	3900 x $0.19 = $741
total cost of ending inventory	$2756	$2756
ttal cost accounted for		$72406

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