Bradley Wilmer operates Bradley's Cricket Farm in Fairview, Georgia. Bradley's raises about 18 million crickets a month. Most are sold to pet stores at $10.26 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, Bradley's crickets consume about 16 tons of food and produce 12 tons of manure.
Wilmer has invested $375,000 in the cricket farm, and he had hoped to earn a 60% annual rate of return, which works out to a 5% monthly return on his investment. After looking at the farm's bank balance, Wilmer fears he is not achieving this return. To get more accurate information on the farm's performance, Wilmer bought new accounting software that provides weighted-average process cost information. After Wilmer input the data, the software provided the following reports. However, Wilmer needs help interpreting these reports.
Wilmer 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 those 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 $8,250 (in addition to the costs that follow).

Requirements
Bradley Wilmer has the following questions about the farm's performance during June:
1. What is the cost per box of crickets sold? (Hint: This is the cost of the boxes completed and shipped out of brooding.)
2. What is the gross profit per box?
3. How much operating income did Bradley's Cricket Farm make in June?
4. What is the return on Wilmer's investment of $375,000 for the month of June? (Compute this as June's operating income divided by Wilmer's investment, expressed as a percentage.)
5. What monthly operating income would provide a 5% monthly rate of return? What price per box would Bradley's Cricket Farm have had to charge in June to achieve this target monthly rate of return?

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Bradley's Cricket Farm-Brooding Department Month Ended June 30 Production Cost Report (part 1 of 3) Step 1: Flow of Physical Units Step 2: Equivalent Units Transferred- Direct Materials Conversion Costs in 3 Flow of Production 4 Units to account for: Beginning work in process, June 1 Plus: Transferred in during June Total physical units to account for 7,000 30,000 37,000 9 Units accounted for: 10 Completed and transferred out during June 11 27,000 27,000 27,000 27,000 Plus: Ending work in process, June 30 12 13 Total equivalent units 14 3,000 10,000 37,000 10,000 8,000 Total physical units accounted for 37,000 35,000 30,000 2345 6789 9ENMS Bradley's Cricket Farm-Brooding Department Month Ended June 30 Production Cost Report (part 2 of 3) Beginning work in process, June 1 Plus: Costs added during June Total costs to account for Divided by: Total equivalent units |Cost per equivalent unit Direct Transferred- in Conversion Costs Total Materials 162,000 16,000 50,970 66,970 8,000 55,000 58,000 267,970 325,970 196,000 37,000 1.81 30,000 2.10 5.60