ACCOUNTING 211 COMPREHENSIVE PROBLEM 5 ADAM’S APPLE
COMPANY
MMK
This problem has a value of 10% of the final grade
Objective: Demonstrate application of Process Costing of a manufacturing company
including the following:
Determine Department WIP inventory
Calculation of Equivalent Units
Determine Finished Goods Inventory
Calculation of COGS
Determination of Gross Profit
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. Create the WIPs for each department indicating the Cost of each jar as it moves
through the process.
2. 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
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ACCOUNTING 211 COMPREHENSIVE PROBLEM 5 ADAM’S APPLE
COMPANY
MMK
FOH allocated $11,175
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