Ben & Jerry's Homemade, Inc., based in Waterbury, Vermont, started its first ice cream shop in a former gas station in 1978.
Making ice cream is a process—a movement of product from a mixing department to a prepping department to a pint department. The mixing department is where the ice cream is created. In the prep area, the production process adds extras such as cherries and dark chocolate to make plain ice cream into “Cherry Garcia,” Ben & Jerry's most popular flavor, or fudge-covered waffle cone pieces and a swirl of caramel for “Stephen Colbert's Americone Dream.” The pint department is where the ice cream is actually put into containers. As the product is processed from one department to the next, the appropriate materials, labor, and overhead are added to determine its cost.
“The incoming ingredients from the shipping and receiving departments are stored in certain locations, either in a freezer or dry warehouse,” says Beecher Eurich, staff accountant. “As ingredients get added, so do the costs associated with them.” How much ice cream is produced? Running plants around the clock, the company produces 18 million gallons a year.
With the company's process cost system, Eurich can tell you how much a certain batch of ice cream ...