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: Percent Completed Units Pulping Conversion 100% 100% 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 80% 70% 7,500 $1,080 $594 142,200 61,794 37,743 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

Explanation / Answer

1 Physical units Pulping Conversion Transferred to next department 142200 142200 142200 Work in process, ending 7500 7500 5250 Equivalent units 149700 149700 147450 2 Pulping Conversion Total costs 62874 38337 Equivalent units 149700 147450 Costs per equivalent unit 0.42 0.26 3 Cost of ending work in process inventory: Pulping 3150 =7500*0.42 Conversion 1365 =5250*0.26 Total 4515 4 Cost of units completed and transferred out Pulping 59724 =142200*0.42 Conversion 36972 =142200*0.26 Total 96696 5 Costs to be accounted for: Work in process, beginning March 1 1674 Cost added during the month. 99537 Total Costs to be accounted for 101211 Cost accounted for as follows: Transferred out 96696 Work in process, ending March 31 4515 Total Cost accounted for 101211

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