Jimmy Jones operates Jimmys Cricket Farm in Eatonton, Georgia. Jimmys raises about 18 million crickets a month.

Jimmy Jones operates Jimmy’s Cricket Farm in Eatonton, Georgia. Jimmy’s raises about 18 million crickets a month. Most are sold to pet stores at $ 12.90 for a box of 1,000 crickets. Pet stores sell the crickets for $ 0.05 to $ 0.10 each as live feed for reptiles.

Raising crickets requires a two- step process: incubation and brooding. In the first process, incubation, employees place cricket eggs on mounds of peat moss to hatch. In the second process, employees move the newly hatched crickets into large boxes filled with cardboard dividers. Depending on the desired size, the crickets spend approximately two weeks in brooding before being shipped to pet stores. In the brooding process, Jimmy’s crickets consume about 16 tons of food and produce 12 tons of manure.

Jones has invested $ 400,000 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, Jones fears he is not achieving this return. To get more accurate information on the farm’s performance, Jones bought new accounting software that provides weighted- average process cost information. After Jones input the data, the software provided the following reports. However, Jones needs help interpreting these reports.

Jones does know that a unit of production is a box of 1,000 crickets. For example, in June’s report, the 7,000 physical units of beginning work in process inventory are 7,000 boxes (each one of these boxes contains 1,000 immature crickets). The finished goods inventory is zero because the crickets ship out as soon as they reach the required size. Monthly operating expenses total $ 1500 (in addition to the costs that follow).

Requirements
Jimmy Jones has the following questions about the farm’s performance during June:
1. What is the cost per box of crickets sold?
2. What is the gross profit per box?
3. How much operating income did Jimmy’s Cricket Farm make in June?
4. What is the return on Jones’s investment of $ 400,000 for the month of June? (Compute this as June’s operating income divided by Jones’s investment, expressed as a percentage.)
5. What monthly operating income would provide a 2% monthly rate of return? What price per box would Jimmy’s Cricket Farm have had to charge in June to achieve a 2% monthly rate ofreturn?

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1Jimmy's Crickett Farm-Brooding Department Step 1 Step 2: Equivalent Units Direct Materials Month Ended June 30 Production Cost Report (part 1 of 3) Flow of Physical Transferred Conversion Costs Units in 3 Flow of Production 4 Units to account for 5 Beginningwork in process, June I 6 Plus: Transferred in during June 7 Totai physical units to account for 7,000 21,000 9 Units accounted for 10Completed and transferred out durirg June 11 Plus: Ending work in process, Juna 30 12 Total physical units accounted for 13 Total equivalent units 14 19,000 7,200 26,200 19,000 19,000 9,000 19,000 3,600 22,600 1Jimmy's Crickett Farm Brooding Department Month Ended June 30 Production Cost Report (part 2 of 3) Transferred- Direct Matorials Conversion Costs Total 3 Beginning work in process, Jurne I 4 Plus: Costs added during June 5 Total costs to account for 21,000 46,200 156,560 51,480 254.240 6 Divided by: Total equivalent units 7 Cost per equivalent unit 28000 2.40 26.200 Jimmy's Crickett Farm-Brooding Department Month Ended June 30 Production Cost Report (part 3 of 3) Assignment of total cost Transferred- Direc Conversion Costs in Materials Total 4 Comploted and transferred out 5 Equvalent units completed and transferred out 6 Multiplied by: Cost per equivalent unit 19,000 19,000-ו 2.50 19,000 2.40 S 7.50 S Cost assigned to units completed and transferred out 45,600142500 47500 235600 9 Ending work in process: 10 Equvalent units in ending WIP 11Multiplied by: Cost per equivalent unit 9,000 7,200 3,600 $240 7.50 2.50 21,600 54,000 9 Cost assigned to units in ending WIP 9,000 84,600 13 14 Total costs accounted for 15 320,200