In: Accounting
make sure to do all parts I'll rate
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.
Required: | |||
1. | Jonathan has noticed that his production manager has omitted some of the data on the Cost of Production panel. Determine the missing information. If there is no amount or an amount is zero, enter "0".* | ||
2. | On the February Cost Analysis panel, 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 panel.* | ||
3. | On the March Cost Analysis panel, 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 panel.* | ||
4. | After reviewing your work on the February Cost Analysis and March Cost Analysis panels, assist Jonathan Groat in evaluating the Mixing Department’s performance by answering the questions on the Mixing Dept. Evaluation panel. | ||
5. | On March 31, using the data
provided on the panels, journalize the entry to move the
appropriate amount of cost from the Mixing Department to the Baking
Department. Refer to the Chart of Accounts for exact wording of
account titles.
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Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Grainy Goodness Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Cost of Production
1. Jonathan has noticed that his production manager has omitted some of the data on the Cost of Production panel. 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 | |||
UNITS | Whole Units | Equivalent Units | |
Direct Materials | Conversion | ||
Units charged to production: | |||
Inventory in process, March 1 | 2,000 | ||
Received from materials storeroom | 38,000 | ||
Total units accounted for by the Mixing Department | 40,000 | ||
Units to be assigned costs: | |||
Inventory in process, March 1 (40% completed) | 2,000 | ||
Started and completed in March | 35,000 | 35,000 | 35,000 |
Transferred to Baking Department in March | 37,000 | ||
Inventory in process, March 31 (80% completed) | 3,000 | ||
Total units to be assigned costs | 40,000 |
COSTS | Costs | ||
Direct Materials | Conversion | Total | |
Cost per equivalent unit: | |||
Total costs for March in Mixing Department | $41,420 | $38,600 | |
Total equivalent units | ÷ | ÷ | |
Cost per equivalent unit | |||
Costs assigned to production: | |||
Inventory in process, March 1 | $2,300 | $640 | $2,940 |
Costs incurred in March | 80,020 | ||
Total costs accounted for by the Mixing Department | $82,960 | ||
Cost allocated to completed and | |||
partially completed units: | |||
Inventory in process, March 1 balance | $2,940 | ||
To complete inventory in process, March 1 | $0.00 | $1,200 | 1,200 |
Cost of completed March 1 work in process | $4,140 | ||
Started and completed in March | $38,150 | $35,000 | 73,150 |
Transferred to Baking Department in March | |||
Inventory in process, March 31 | $3,270 | $2,400 | |
Total costs assigned by the Mixing Department |
February Cost Analysis
2. 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 panel. Round your per-unit computations to the nearest cent, if required.
Cost Analysis for February - Mixing Department |
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Amount | Equivalent Units | Cost per Unit | |
Direct Materials in inventory in process, March 1 | |||
Conversion costs in inventory in process, March 1 | |||
Total cost per unit |
March Cost Analysis
3. 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 panel. Round your per-unit computations to the nearest cent, if required.
Cost Analysis for March- Mixing Department |
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Amount | Equivalent Units | Cost per Unit | |
Costs for March: Direct Materials | |||
Costs for March: Conversion | |||
Total cost per unit |
Mixing Dept. Evaluation
4. After reviewing your work on the February Cost Analysis and March Cost Analysis panels, 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?
No difference
Lower
Higher
For which component(s) was the cost per unit for March higher than in February? Check all that apply.
Conversion costs
Both were higher for March
Direct material costs
What is most probably your recommendation to Jonathan Groat given your computations?
Investigate a detailed breakdown of conversion costs to determine the source of the higher per-unit cost.
Look into creating higher incentives for administrative staff in order to create more effective reporting procedures.
Pay higher commissions to salespeople to spur sales.
Investigate a detailed breakdown of direct materials cost to determine the source of the higher per-unit cost.
Journal
5. On March 31, using the data provided on the panels, journalize the entry to move the appropriate amount of cost from the Mixing Department to the Baking Department. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 15
JOURNAL
ACCOUNTING EQUATION
DATE | DESCRIPTION | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | |
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1 |
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2 |
Cost of Production Report-Mixing Department | ||||
For the Month Ended March 31 | ||||
UNITS | Whole Units | Equivalent Units | ||
Direct Materials | Conversion | |||
Units charged to production: | ||||
Inventory in process, March 1 | 2,000 | 2,000 | 2,000 | |
Received from materials storeroom | 38,000 | 38,000 | 38,000 | |
Total units accounted for by the Mixing Department | 40,000 | 40,000 | 40,000 | |
Units to be assigned costs: | ||||
Inventory in process, March 1 (40% completed) | 2,000 | 0 | 1200 | (2000*60%) |
Started and completed in March | 35,000 | 35,000 | 35,000 | |
Transferred to Baking Department in March | 37,000 | 35000 | 36200 | |
Inventory in process, March 31 (80% completed) | 3,000 | 3000 | 2400 | (3000*80%) |
Total units to be assigned costs | 40,000 | 38000 | 38600 | |
COSTS | Costs | |||
Direct Materials | Conversion | Total | ||
Cost per equivalent unit: | ||||
Total costs for March in Mixing Department | $41,420 | $38,600 | $80,020 | |
Total equivalent units | 38000 | 38600 | ||
Cost per equivalent unit | $1.09 | $1.00 | $2.09 | |
Costs assigned to production: | ||||
Inventory in process, March 1 | $2,300 | $640 | $2,940 | |
Costs incurred in March | $41,420 | $38,600 | 80,020 | |
(38150+3270) | (80020-41420) | |||
Total costs accounted for by the Mixing Department | $43,720 | $39,240 | $82,960 | |
Cost allocated to completed and | ||||
partially completed units: | ||||
Inventory in process, March 1 balance | $2,940 | |||
To complete inventory in process, March 1 | $0.00 | $1,200 | 1,200 | |
Cost of completed March 1 work in process | $4,140 | |||
Started and completed in March | $38,150 | $35,000 | 73,150 | |
Transferred to Baking Department in March | $38,150.00 | $36,200.00 | $77,290 | |
Inventory in process, March 31 | $3,270 | $2,400 | $5,670 | |
Total costs assigned by the Mixing Department | $41,420.00 | $38,600.00 | $82,960 | |
ANS 2 | ||||
Cost Analysis for February - Mixing Department | ||||
Amount | Equivalent Units | Cost per Unit | ||
Direct Materials in inventory in process, March 1 | $2,300 | 2000 | $1.15 | |
Conversion costs in inventory in process, March 1 | $640 | 800 | $0.80 | |
(2000*40%) | $1.95 | |||
ANS 3 | ||||
Cost Analysis for March- Mixing Department | ||||
Amount | Equivalent Units | Cost per Unit | ||
Costs for March: Direct Materials | $41,420 | 38000 | $1.09 | |
Costs for March: Conversion | $38,600 | 38600 | $1.00 | |
Total cost per unit | $2.09 | |||
ANS 4 | ||||
Total cost was higher in March | ||||
Conversion cost was higher in March | ||||
Investigate a detailed breakdown of conversion costs to determine the source of the higher per-unit cost. | ||||
Ans 5 | Dr | Cr | ||
Work In process-baking Department | $77,290 | |||
Work In process-Mixing Department | $77,290 |