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 3,300 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% 80% $ 1,155 $ 561 157,800 $ 60,006 $ 33,837 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

Scribners Corporation Requirement 1 Equivalent units of production: Pulping Conversion 157800 157800 Transferred to next department Equivalent unist in ending WIP Pulping: 7500 x 100% Conversion : 7500 x 80% Equivalent units of production 7500 6000 163800 165300 Requirement 2 Cost per Equivalent unit Cost of beginning WIP Cost added during the period Total cost (a) Equivalent units of production (b) Cost per equivalent unit (a) / (b) Pulping Conversion 1155 561 60006 33837 61161 34398 165300 163800 0.37 0.21 Requirement 3 Cost of ending WIP and units transferred out: Pulping Conversion Totals 7500 0.37 2775 6000 0.21 1260 4035 Ending Work in Process Inventory: Equivalent units Cost per equivalent unit Cost of ending WIP inventory Units completed and transferred out: Units transferred to next department Cost per equivalent unit Cost of units completed and transferred out 157800 0.37 58386 157800 0.21 33138 91524 Requirement 4 Cost Reconciliation Cost to be accounted for: Cost of Beginning Work in Process Inventory Costs added to production during the period Total cost to accounted for Costs accounted for as follows: Costs of units completed and transferred out Cost of ending WIP inventory Total costs accounted for 1716 93843 95559 91524 4035 95559

Lubricants, Inc. Requirement 1 a. Raw materials used in production. Work in Process - Refining Dept Work in Process - Blending Dept Raw Materials 157600 46000 b. Direct labor costs incurred. Work in Process - Refining Dept Work in Process - Blending Dept Salaries and Wages Payable 80200 18000 98200 696000 c. Manufacturing overhead costs incurred for the entire factory, Manufacturing Overhead 696000 Accounts Payable 696000 d. Manufacturing overhead was applied to production using a predetermined overhead rate Work in Process - Refining Dept Work in Process - Blending Dept 111000 Manufacturing Overhead 582000 e. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, Work in Process - Blending Dept 672000 Work in Process - Refining Dept 672000 f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, Finish goods 740000 Work in Process - Blending Dept 740000 1470000 The Cost of Goods Sold g. Completed units were sold on account, Accounts Recivable 1470000 Sales Cost of Goods Sold 660000 Finished Goods 1470000 660000

Requirement 2 Raw materials Work in process-Blending Dept Finished goods 210600 56000 28000 Accounts Receivable 1470000 (g) Bal. Raw Materials 210600 7000 203600 (a) Bal. Bal. Work in Process Refining Dept Bal. 32400 672000 (e) (a) 157600 (b) 80200 471000 Bal. 69200 Work in Process Blending Dept 56000 740000 (8) 46000 (b) 18000 (d) 111000 ('e) 672000 Bal. 163000 (d) Bal. Finished Goods 28000 660000 (g) 740000 108000 EH (c) Manufacturing Overheade 696000 582000 (d) 114000 Bal. Bal. Accounts Payable 696000 (C) Salaries and Wages Payable 98200 (b) Sales Cost of Goods Sold 660000 1470000 (8) (g)