Question

Mastery Problem: Process Cost Systems

Grainy Goodness Company

Grainy Goodness Company manufactures granola cereal by a series of three processes, beginning materials such as oats, sweeteners, and nuts being introduced in the Mixing Department. From the Mixing Department, the materials pass through the Baking and Packaging departments, emerging as boxed granola cereal ready for shipment to retail outlets. Direct materials are added at the beginning of each process, and conversion costs are incurred evenly throughout production in each department.

During March, the President and sole stockholder, Jonathan Groat, reviewed the Cost of Production Report for the Mixing Department. He is concerned that the Mixing Department may not be operating efficiently, and asks for your help.

Cost of Production

Jonathan has noticed that his production manager has omitted some of the data on the Cost of Production. Determine the missing information. If there is no amount or an amount is zero, enter "0". Round your per-unit computations to the nearest cent, if required.

Grainy Goodness Company

Cost of Production Report-Mixing Department

For the Month Ended March 31

Unit Information

Units charged to production:

Inventory in process, March 12,000

Received from materials storeroom38,000

Total units accounted for by the Mixing Department40,000

Units to be assigned costs:

Equivalent Units

Whole
UnitsDirect
Materials
Conversion

Inventory in process, March 1 (40% completed)2,000

Started and completed in March35,00035,00035,000

Transferred to Baking Department in March37,000

Inventory in process, March 31 (90% completed)3,000

Total units to be assigned costs40,000

Cost Information

Cost per equivalent unit:

Direct
Materials
Conversion

Total costs for March in Mixing Department$40,660$36,955

Total equivalent units÷÷

Cost per equivalent unit$$

Costs assigned to production:

Direct
Materials
Conversion
Total

Inventory in process, March 1$2,200$600$2,800

Costs incurred in March77,615

Total costs accounted for by the Mixing Department$80,415

Cost allocated to completed and partially completed units:

Inventory in process, March 1-balance$2,800

To complete inventory in process, March 11,1401,140

Cost of completed March 1 work in process$3,940

Started and completed in March37,45033,25070,700

Transferred to Baking Department in March$

Inventory in process, March 313,2102,565

Total costs assigned by the Mixing Department$

Feedback

Review the format and the steps to complete the Cost of Production Report.

February Cost Analysis

Determine the cost per unit of direct materials and for conversion for the month of February using the completed data on the Cost of Production. Round your per-unit computations to the nearest cent, if required.

Cost Analysis for February - Mixing Department

AmountEquivalent UnitsCost per Unit

Direct Materials in inventory in process, March 1$$

Conversion costs in inventory in process, March 1

Total cost per unit$

Feedback

Look for the dollar amount and number of equivalent units on the Cost of Production Report that pertain to the inventory in process on March 1. Don’t forget that direct materials are added at the beginning of the process and so have all been added to inventory in process on March 1. The conversion costs are only partially complete.

March Cost Analysis

Determine the cost per unit of direct materials and for conversion for the month of March using the completed data on the Cost of Production. Round your per-unit computations to the nearest cent, if required.

Cost Analysis for March- Mixing Department

AmountEquivalent UnitsCost per Unit

Costs for March: Direct Materials$$

Costs for March: Conversion

Total cost per unit$

Feedback

Look for the dollar amount and number of equivalent units on the Cost of Production Report that pertain to the costs and units added in March. Don’t forget that direct materials are added at the beginning of the process. The conversion costs are added evenly through the month.

Mixing Dept. Evaluation

After reviewing your work on the February Cost Analysis and March Cost Analysis, assist Jonathan Groat in evaluating the Mixing Department’s performance by answering the following questions:

In March, was the Mixing Department’s total cost per unit higher or lower than in February?

For which component was the cost per unit for March higher than in February?

What is most probably your recommendation to Jonathan Groat given your computations?

Journal

On March 31, using the data provided on the Cost of Production, journalize the entry to move the appropriate amount of cost from the Mixing Department to the Baking Department. If an amount box does not require an entry, leave it blank.

Mar. 31

Answer 1