Scribners Corporation produces fine papers in three production departments—Pulpi

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:

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 3,100 5,000 Conversion 189% 100% 80% 70% Work in process inventory, March 1 Work in process inventory, March 31 Pulping cost in work in process inventory, March1 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 $1,674 $1,147 162,100 $ 93,573 $ 66,749 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

Explanation / Answer

Scribners Corporation Drying Department Production Report % of completion 1..Equivqlent units Units to account for Pulping Conversion Pulping Conversion WIP Inventory, Mar.1 3100 Units started 164000 Total Units to account for 167100 Units accounted for: Units trfd. To the next prodn.dept. 162100 100 100 162100 162100 WIP Inventory, Mar.31 5000 100 70 5000 3500 Total Units accounted for 167100 167100 165600 Cost of production & reconciliation Costs to account for WIP Inventory, Mar.1 1674 1147 2821 Costs added during March 93573 66749 160322 Total Costs to account for 95247 67896 163143 1..Equivalent units of production 167100 165600 2..Cost/Eq. Unit 0.57 0.41 0.98 5..Cost reconciliation 4..Units trfd. To the next prodn.dept. 92397 66461 158858 3.WIP Inventory, Mar.31 2850 1435 4285 Total costs accounted for 95247 67896 163143

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