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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.

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 (35% 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	$40,660	$38,700
Total equivalent units
Cost per equivalent unit
Costs assigned to production:
Inventory in process, March 1	$2,400	$525	$2,925
Costs incurred in March			79,360
Total costs accounted for by the Mixing Department			$82,285
Cost allocated to completed and partially completed units:
Inventory in process, March 1-balance			$2,925
To complete inventory in process, March 1	$0.00	$1,300	1,300
Cost of completed March 1 work in process			$4,225
Started and completed in March	$37,450	$35,000	72,450
Transferred to Baking Department in March
Inventory in process, March 31	$3,210	$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?

Higher

No difference

Lower

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

Direct material costs

Conversion costs

Both were higher for March

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

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

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.

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
1
2

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