HWK CH 17

Q10.

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 theCost of Production Reportfor 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 storeroom 38,000

Total units accounted for by the Mixing Department 40,000

Units to be assigned costs:

Equivalent Units

WholeUnits DirectMaterials Conversion

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 ? ?

Cost Information

Cost per equivalent unit:

DirectMaterials Conversion

Total costs for March in Mixing Department $40,660 $36,670

Total equivalent units ? ?

Cost per equivalent unit ? ?

Costs assigned to production:

DirectMaterials Conversion Total

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

Costs incurred in March 77,330

Total costs accounted for by the Mixing Department $80,130

Cost allocated to completed and partially completed units:

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

To complete inventory in process, March 1 ? 1,140 1,140

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

Started and completed in March 37,450 33,250 70,700

Transferred to Baking Department in March $?

Inventory in process, March 31 3,210 2,280 ?

Total costs assigned by the Mixing Department ?

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

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

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

Amount Equivalent Units Cost per Unit

Costs for March: Direct Materials ? ? ?

Costs for March: Conversion ? ? ?

Total cost per unit

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?

• Higher
• Lower
• No difference

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

• Conversion costs
• Direct material costs
• Both were higher for March
• Neither were higher for March

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.
• Investigate a detailed breakdown of direct materials cost 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.

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 $? $?
• Factory Overhead-Mixing
• Factory Overhead-Baking
• Factory Overhead-Packaging
• Work in Process-Baking
• Work in Process-Mixing

$? $?

• Factory Overhead-Mixing
• Factory Overhead-Baking
• Factory Overhead-Packaging
• Work in Process-Baking
• Work in Process-Mixing