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 1			2,000
Received from materials storeroom			38,000
Total units accounted for by the Mixing Department			40,000
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	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 (90% completed)	3,000
Total units to be assigned costs	40,000
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 March			77,615
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 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	2,565
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
	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	$

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. Dont 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
	Amount	Equivalent Units	Cost 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. Dont 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 Departments performance by answering the following questions:

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

Higher

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

Conversion 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.

Feedback

What per-unit costs have increased in March when compared to February? How can you tell what is creating that change?

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