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 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 (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 (90% completed) 3,000 Total units to be assigned costs 40,000 Cost per equivalent unit: Direct Materials Conversion Total costs for March in Mixing Department $40,660 $37,050 Total equivalent units ÷ ÷ Cost per equivalent unit $ $ Costs assigned to production: Direct Materials Conversion Inventory in process, March 1 $2,200 $525 $2,725 Costs incurred in March 77,710 Total costs accounted for by the Mixing Department $80,435 Cost allocated to completed and partially completed units: Inventory in process, March 1-balance $2,725 To complete inventory in process, March 1 ? 1,235 1,235 Cost of completed March 1 work in process $3,960 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 $
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Mastery Problem:
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
| 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 (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 (90% completed) | 3,000 | ||
| Total units to be assigned costs | 40,000 |
| Cost per equivalent unit: | ||
| Direct Materials |
Conversion |
|
| Total costs for March in Mixing Department | $40,660 | $37,050 |
| Total equivalent units | ÷ | ÷ |
| Cost per equivalent unit | $ | $ |
| Costs assigned to production: |
Direct Materials |
Conversion |
||
| Inventory in process, March 1 | $2,200 | $525 | $2,725 |
| Costs incurred in March | 77,710 | ||
| Total costs accounted for by the Mixing Department | $80,435 | ||
| Cost allocated to completed and partially completed units: | |||
| Inventory in process, March 1-balance | $2,725 | ||
| To complete inventory in process, March 1 | ? | 1,235 | 1,235 |
| Cost of completed March 1 work in process | $3,960 | ||
| 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 | $ |
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