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 3,800 7,500 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% 80% 100% 75% $ 1,729 $ 1,064 150,800 $ 74,255 $ 48,992 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	158,300	156,425

.

	Pulping	Conversion
Cost per equivalent Unit	$ 0.48	$ 0.32

.

	Pulping	Conversion	Total
Cost of Ending work in process Inventory	$ 3,600	$ 1,800	$ 5,400

.

	Pulping	Conversion	Total
cost of Units Completed and transferred out	$ 72,384	$ 48,256	$ 120,640

.

Cost Reconciliation
Costs to be accounted for:
Beginning Wip cost	$ 2,793
Cost incurred during period	$ 123,247
Total cost to be accounted for	$ 126,040
Costs accounted for as follows:
Cost of Units Transferred Out	$ 120,640
Cost of Ending Wip	$ 5,400
Total cost accounted for	$ 126,040

Working

Statement of Equivalent Units(Weighted average)
				Pulping		Conversion
	Units			Complete %	Equivalent units	Complete %	Equivalent units
Transferred out	150,800			100%	150,800	100%	150,800
Ending WIP	7,500			100%	7,500	75%	5,625
Total	158,300			Total	158,300	Total	156,425

.

Cost per Equivalent Units (Weighted average)
COST		Pulping	Conversion	TOTAL
Beginning WIP Inventory Cost (A)		$ 1,729	$ 1,064	$ 2,793
Cost incurred during period (B)		$ 74,255	$ 48,992	$ 123,247
Total Cost to be accounted for (C=A+B)		$ 75,984	$ 50,056	$ 126,040
Total Equivalent Units(D)		158,300	156,425
Cost per Equivalent Units (E=C/D)		$ 0.48	$ 0.32	$ 0.80

.

Statement of cost (Weighted average)
Cost	Equivalent Cost/unit	Ending WIP		Transferred
		Units	Cost Allocated	Units	Cost Allocated
Pulping	$ 0.48	7,500	$             3,600.00	150,800	$          72,384.00
Conversion	$ 0.32	5,625	$             1,800.00	150,800	$          48,256.00
TOTAL	$ 126,040	TOTAL	$ 5,400	TOTAL	$ 120,640