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 Departments 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.

*Round your per-unit computations to the nearest cent, if required.

CHART OF ACCOUNTS

Grainy Goodness Company

General Ledger

	ASSETS
110	Cash
112	Accounts Receivable
125	Notes Receivable
126	Interest Receivable
131	Materials
141	Work in Process-Mixing
142	Work in Process-Baking
143	Work in Process-Packaging
151	Factory Overhead-Mixing
152	Factory Overhead-Baking
153	Factory Overhead-Packaging
161	Finished Goods
171	Office Supplies
172	Prepaid Insurance
173	Prepaid Expenses
181	Land
191	Factory
192	Accumulated Depreciation-Factory

	LIABILITIES
210	Accounts Payable
215	Notes Payable
221	Utilities Payable
236	Interest Payable
251	Wages Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
520	Wages Expense
529	Selling Expenses
531	Utilities Expense
532	Depreciation Expense-Factory
533	Insurance Expense
534	Office Supplies Expense
540	Administrative Expenses
590	Miscellaneous Expense
710	Interest Expense

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
Costs 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

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
	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

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
	Amount	Equivalent Units	Cost per Unit
Costs for March: Direct Materials
Costs for March: Conversion
		Total cost per unit

4. After reviewing your work on the February Cost Analysis and March Cost Analysis panels, assist Jonathan Groat in evaluating the Mixing Departments performance by answering the following questions:

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

Y/N - No difference

Y/N - Higher

Y/N - Lower

For which component(s) was the cost per unit for March higher than in February? Check all that apply.

Y/N - Both were higher for March

Y/N - Direct material costs

Y/N - Conversion costs

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

Y/N - Investigate a detailed breakdown of conversion costs to determine the source of the higher per-unit cost.

Y/N - Look into creating higher incentives for administrative staff in order to create more effective reporting procedures.

Y/N - Investigate a detailed breakdown of direct materials cost to determine the source of the higher per-unit cost.

Y/N - Pay higher commissions to salespeople to spur sales.

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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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2