We Bake Perfect Pies Company makes fruit pies using a process cost system. The dough is made in the mixing department and then moves to the rolling department where crusts are rolled and placed into baking pans. The pans move into the filling department where fruit is placed into the crusts. The pies then move to the baking department. Once the pies have been baked, they move to packaging they are boxed and then sent to Finished Goods. During the month of October the company had sales of $83,000. Each pie sells for $10.

Using the following information, determine the Gross Profit for the Month of October.

Mixing Department: Beginning Balance 0

Ending inventory 1000 pies at 40% completion

DM used: $1000

DL used: $800

FOH allocated: $1200

Rolling Department: Beginning Balance 1600 pies that were 70% completed with costs of $600

Pies started: 9000

Pies transferred to Filling Department: 8100

Ending Inventory was 10% completed

DL used: $2338

FOH allocated: $2000

Filling Department: Beginning Balance 3000 pies that were 20% completed with costs of $7500

Ending inventory was 75% completed

DM used: $16200

DL used: $3800

FOH allocated: $1975

Baking Department: Beginning Balance 0

Pies Transferred into department 7600

FOH allocated: $14160

Ending inventory: 1300 pies that were 60% completed

Packaging Department: Beginning Balance: 2100 pies at 20% completion with costs of $12,600

Ending Inventory was 2000 pies at 90% completed

DM used: $7875

DL used: $1945

FOH allocated: $3890

Finished Goods Department: Beginning Balance: 2600 pies with costs of $15626

SOLUTION

MIXING DEPARTMENT:

A=0

B+C=10,000

C=1000(40% complete)

9000 units transferred to rolling

DM=$1000

DL=$800

FOH=$1,200

DM= $1,000/10,000=$.1 per unit

CC per unit= $2000/(9000+400) = .21277

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ROLLING DEPARTMENT:

A=1, 600 (70% complete)

B+C= 9,000

C=2,500(10% complete)

1,600 + 6,500= 8,100 transferred to Filling

Cost of A(1,600)=$600

DL=$2,338

FOH= $2000

CO for 9000 units=($.10 +.2128) X 9000= $2814.93 Transferred from mixing department

CC per unit=($2,338+ $2000)/(480+6,500+250)= $4,338/7,230 equivalent units=$.6 per unit.

FILLING:

A= 3000 (20% complete)

B=1,600

B+C= 6,500

C=3,500 (75% complete)

3000 transferred to baking

1,600 transferred to baking

3,000 transferred to baking, out of 6,500

COST of A (3000 units)= $7, 500

DM= $16, 200

DL= $3, 800

FOH= $1,975

CO cost of 1,600 transferred from rolling = $600 + (30% x 1600) X $.60 CC = $600 + +$288= $888

CO cost of 6,500 transferred from rolling = 6, 500 X ($.6 CC + $.3127)=$3900 + $2032.55= $5932.55

DM cost per unit= $16, 200/ (1, 600 + 6, 500) = $2.0

CC cost per unit=( $3,800 +$1,975)/ (2,400 + 1,600 + 3000 + 2,625) = $5, 775/ 9625 equivalent units = $.6

BAKING:

A=0

B= 3000

B=1,600

B + C= 3000

C= 1,300 (60% complete)

3000 units transferred to packing

1,600 units transferred to packing

1,700 units transferred to packing out of 3,000

FOH= $14, 160

CO cost of 3,000 transferred from filling =$7,500 + (%80 x 3,000)x $.60 CC= $7,500 + $1,440= $8,940

CO cost per unit=$2.98

CO cost of 1,600 transferred from filling =1, 600 x ($2 DM + $.6 CC)=$4,160

CO cost per unit =$3.155

CO cost of 3000 transferred from filling= 3,000 x ($.9127 CO + $2 DM + $.60 CC)= 3,000 x $3.5127= $10,538.1

CO cost per unit =$3.513

CC= $14,160/(3,000+1,600+1,700+ 780)=$14, 160/ 7,080 equivalent units= $2.0

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PACKAGING:

A= 2,100 (20% complete)

B=3000

B+C=1600

B+C=1,700

C= 300(90% complete) out of 1,600

C=1,700 (90% complete out of 1,700)

2,100 units transferred to FGI

3,000 units transferred to FGI

1,300 units out of 1,600 transferred to FGI

Cost of 2,100 A=$12, 600

DM= $7875

DL= $1,945

FOH=$3, 890

CO cost of 3,000 units transferred from baking =$14, 940 $2.00 per unit

CO cost of 1,600 units transferred from baking=$8,248 $2.98 per unit

CO cost of 1,700 units transferred from baking=$9,372.1 $5.513 per unit

DM cost per unit in packaging= $7875/ (3000 + 1,600+ 1,700)= $1.25

CC per unit in packaging= ($1,945 + $3, 890)/(20%x2100 + 3000+ 1300 + 90%2,000)=$5,835/7780 equivalent units=$.75

FGI

BB= 2,600 units= 15,626 $6.01 per unit

2,1000 units= $13, 860( 2,100 x 80%) x $.75 + $12,600= $13,860 $13,860/2100=6.60 per unit

3,000 units =$20, 940 3000($1.25 DM +$.75 CC) + $14, 940 CO= $20, 940 $20, 940/3000= $1.4286

1,300 units=$9, 301.5 1,300($1.25 DM + $.75 CC) + 1300(8248/1600)= 1300($2.0 +$5.155)=$9301.5

COGS for 8300 sold.

COGS= $15, 626 + $13, 860 + $20, 940 + (600 x $7.155=$4293)= $54,719

GROSS PROFIT= $83,000 – $54,719= $28,281