Question

Exercise 5-11 Comprehensive Exercise; Second Production Department-weighted Average Method (LO5-2, LO5-3, LO5-4, LO5-5) 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 2,900 8,400 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% $ 1,189 $ 667 143,400 $ 64,085 $ 39,752 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

1) Equivalent unit

	Material	Conversion Cost
Unit transferred out	143400	143400
Ending WIP	8400	8400*75% = 6300
Equivalent unit	151800	149700

2) Cost per equivalent unit

	Material	Conversion
Beginning WIP	1189	667
Cost added	64085	39752
Total Cost	65274	40419
Equivalent unit	151800	149700
Cost per EUP	0.43	0.27

3) Cost of ending WIP

	Material	Conversion	Total
Cost of ending WIP	8400*.43 = 3612	6300*.27 = 1701	5313

4) Cost of unit transferred out

	Material	Conversion	Total
Cost of unit transferred out	61662	38718	100380

5) Cost reconciliation

Cost to be accounted for
Beginning WIP	1856
Cost Incurred	103837
Total Cost to be accounted for	105693
Cost accounted as
Cost of unit transferred out	100380
Cost of ending WIP	5313
Total Cost accounted as	105693