Rich spent the month of December talking to various suppliers in order to determine his cost structure. The results are listed in Table #1.
S & S opened on time in January. During the month they used 200 pounds of flour, 200 pounds of sugar, 67 dozen eggs and had 4 bad eggs to dispose of during the month (the cost of the eggs is immaterial), 20 baking soda boxes, 200 pounds of butter, 100 pounds of raisins, and other ingredients (one box of each for a total of three) all from one supplier on account.
Manufacturing overhead is applied to production at $4 per cake. Rich purchased the oven using the startup capital and paid all the salaries. The girls worked 300 hours in total for the month. The first month was very good for the bakery as they baked and sold 200 cakes for cash. The average price was $50 per cake. All manufacturing overhead is closed out at the end of the month. The supplier was paid, in full, at the end of the month also.
Required: Document the bakery’s transactions using T- accounts (round all calculations to 2 decimals). All other costs such as utilities must be accounted for in the T – accounts (assume such transactions where applicable, are paid in cash).