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