ALE-63 COST PER UNTI' AND GRUSS PRDFIT If Learning Dbjecrre 5} Yaovi Akpawu operates Yaovi's Cricket Farm in Thunder Bay, Dntario. Yaovi's raises about 18 million crickets a month. Most are sold to pet stores at $12.6 for a box of 1,[}' crickets. Pet stores sell the crickets for $D.5 to $0.10 each as live feed for reptiles. Raising crickets requires a twostep process: incubation and brooding. In the first process, employees place cricket eggs on moimds of peat moss to hatch. In the second process, employees move the newly hatched crickets into large boxes lled with cardboard dividers. Depending on the desired size, the crickets spend approximately 2 weeks in brooding before being shipped to pet stores. In the brooding process, Yaovi's crickets consume about 16 tonnes of food and produce 12 tonnes of manure. Akpawu has invested $4, in the cricket farm, and he had hoped to earn a 24% annual rate of return, which works out to a 2% monthly return on his investment. After looking at the farm's bank balance, Akpawu fears he is not achieving this return. To get more accurate information on the farm's performance, Akpawu bought new accounting software that provides weightedaverage process cost information. After Akpaimr input the data, the software provided the following reports. However, Akpawu needs help interpreting these reports. Akpawu does know that a unit of production is a box of LUCIE} crickets. For example, in June's report, the RUDD physical units of beginning work in process iI'lVEIItDI'F are EUDU boxes [each one of the EDGE] boxes contains Ltl immature crickets}. The finished goods inventory is zero because the crickets ship out as soon as the}? reach the required size. M}? operating expenses total $2, {in addition to the costs that follow). YAOVI'S CRICKET FARM Brooding Department Production Cost Report (part 1 of 2) Month Ended June 30 Equivalent Units Flow of Flow of Transferred- Direct Conversion Production Physical in Materials Costs Units Units to account for: Beginning work in process inventory. June 1 Transferred in 7,000 during June Total units to 21.000 account for Units accounted 28,000 for:Completed and shipped out during June Ending work in 10.000 10,000 19,000 19,000 process, June 30 Total physical 0,000 9,000 7 200 3.800 units accounted for Total equivalent 28.000 units 28,000 26,200 22,800YAOVI'S CRICKET FARM Brooding Department Production Cost Report (part 2 of 2) Month Ended June 30 Transferred- Direct Conversion Total in Materials Costs Unit costs: Beginning work in $21.000 $ 39,040 $ 5,020 $ 85,980 process, June 1 Costs added 46.200 158,560 51,480 254.240 during June Total costs to $87,200 $190,500 $56,500 $320,200 account for Divide by total +28,000 :26,200 :22,600 equivalent units Cost per $ 2.40 S 7.50 $ 2.50 equivalent unit Assignment of total cost:Units completed |19,000 x ($2.40 + $7.50 + $2.50)] $235,800 and shipped out during June Ending work in process. June 30: Transferred-in (9,000 x $2.40] 21.600 costs Direct materials (7,200 * $7.50| 54,000 Conversion 3,600 x $2.50] 9,000 costs Total ending 84.600 work in process, June 30 Total cost $320,200 accounted for