Question

Check my worlu 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 2,700 100% sex Work in process inventory, March 31 7,500 100% 70% Pulping cost in work in process Inventory, March 1 $1,050 Conversion cost in work in process inventory, March 1 5 Units transferred to the next production department 142,200 Pulping cost added during March $ 61,794 Conversion cost added during March $ 37,743 596 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 < Prex 4 of 4 Next

Answer 1

1. Dying Department's equivalent units of production are:

Formula = Units Completed and transferred to next department + (Closing Work-in-Process Inventory * Percentage complete of Closing Stock)

Pulping = 142,200 + 7,500 = 149,700 units

Conversion = 142,200 + 70%*7,500 = 142,200 + 5,250 = 147,450 units

2. Dying Department's cost per equivalent unit are:

Formula = (Cost of Beginning Work in Process Inventory + Cost added during the year)/Equivalent Units during the period

Pulping = $(1,080 + 61,794)/149,700 = $0.42

Conversion = $(594 + 37,743)/147,450 = $0.26

3. Dying Department's cost of ending work in process inventory are:

Formula = Cost per unit (as calculated in point 2) * Closing Work-in-process inventory

Pulping = $0.42 * 7,500 = $3,150

Conversion = $0.26 * 5,250 = $1,365

Total Cost = $(3,150 + 1,365) = $4,515

4. Dying Department's cost of units transferred out to the Finishing Department are:

Formula = Cost per unit (as calculated in point 2) * 142,200 (units transferred to the Finishing Department)

Pulping = $0.42 * 142,200 = $59,724

Conversion = $0.26 * 142,200 = $36,972

Total Cost = $(59,724 + 36,972) = $96,696

5. Cost Reconciliation Report for the Dying Department for March:

Cost to be accounted for:
Cost of beginning work-in-process inventory	$ 1,674
Costs added during the period	$ 99,537
Total cost accounted for March	$101,211
Cost accounted for as follows:
Cost of ending work-in-process inventory	$ 4,515
Cost of units transferred to Finishing Department	$ 96,696
Total cost accounted for March	$101,211