Scenario:
YUM YUM COOKIES Company manufactures cookies. Materials are added in the Baking Department. After processing, the cookies are moved to the Packing Department where more materials are added. The completed packages are then moved to Finished Goods.
Task:
Using the data below the month of July, determine the July Gross Profit using FIFO inventory methods.
June 30:
Raw Material Inventory: $235,000
Baking Department: WIP # = 0 WIP $ = 0
Packing Department: WIP # = 6000 cases at 80% completion, WIP$ = $95,000
Finished Goods Inventory: WIP # 20,000 cases WIP $ = $300,000
July Transactions:
Materials Purchased on Account: $520,000
# Cases started: Baking Department: 50,000
Packing Department: 35,000
Materials Requisitioned:
Baking Dept:$225,000 DM, $25,000 IM
Packing Dept: $40,250 DM, $9,750 IM
Labor Costs:
Baking Dept:$106,000 DL, $12,000 IL
Packing Dept: $60,000 DL, $17,000 IL
Misc. Expenses:
Baking Dept: $18,000
Packing Dept: $14,600
Prepaid Expenses:
Baking Dept: $4,500
Packing Dept: $1000
Depreciation Expenses:
Baking Dept: $46,000
Packing Dept:$ 15,000
FOH Applied:
Baking Dept:$86,700
Packing Dept: $30,345
Sales on Account:
47,000 cases at $42 per case
July 31 WIP
Baking Dept: WIP = 40% complete
Packing Dept: 5000 cases at 10% completion