Adam’s Apple Company makes homemade applesauce using Grandma Adam’s special reci

Question

Adam’s Apple Company makes homemade applesauce using Grandma Adam’s special recipe.   The company uses a FIFO process cost system.   The process starts in the Kettle Room where apples are cored, cut and added to the Kettles along with Grandma’s special spices.   After several hours of slow simmering, the sauce is cooled as it moves to the Canning department where the sauce is poured into jars and sealed.    After the jars are sealed they move to the packing department where they are placed into boxes and moved to finished goods where they are ready for sale.    During the month of March the company sold 5,000 boxes of sauce with each box holding a dozen jars. A jar of sauce sells for $4.00.

1. Using the following information, determine the Gross Profit for the month of March.

Kettle Department:        Beginning Balance 16000 at 90% complete with Costs of $13,600

                                                Ending Inventory 4000 jars at 20% completion

                                                DM used $ 21,280

                                                DL used $ 8,000

                                                FOH allocated $ 6,560

Canning Department:    Beginning Balance 28,000 at 30% complete with costs of $33,600

                                                Jars Started 50,000

                                                Jars Transferred to Packing 62,000

                                                Ending Inventory was 40% completed

                                                DM used $ 30,000         

                                    DL used $ 14,800

                                                FOH allocated $ 19,500

Packing Department:    Beginning Balance 14,000 at 75% complete with costs of $18,990

                                                Ending Inventory 23,000 jars at 10% completed

                                                DM used $ 14000

                                                DL used $ 5600

                                                FOH allocated $ 11000

Finished Good Department: Beginning Balance 21,500 jars with costs of $ 47,515

                                                                DL used $ 18,625

                                                                FOH allocated $11,175

Explanation / Answer

Solution:

Gross Profit:

Cost of Goods Sold =

   Total Begining Balance = 1,13,705

+ Purchase = 0

+ All Costs = 1,12,305

- Ending Inventory = 7,39,200

= 5,13,190

   Net Sales Each Box Having 12 Jars 5,000 * 12 = 2,40,000

   = 2,40,000 - 5,13,190

   = 2,73,190

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