Question

Pirate Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $20.00 per pound and the flakes for $14.40 per pound. On average, 100 pounds of lobster are processed into 53 pounds of tails and 24 pounds of flakes, with 23 pounds of waste. Assume that the company purchased 3,200 pounds of lobster for $4 per pound and processed the lobsters with an additional labor cost of $7,600. No materials or labor costs are assigned to the waste. If 1,552 pounds of tails and 686 pounds of flakes are sold, calculate the allocated cost of the sold items and the allocated cost of the ending inventory. The company allocates joint costs on a value basis. (Round your answers to nearest whole number. Round cost per pound answers to 2 decimal places.)

Answer 1

total units of tails produced = 3200 pounds of lobster *53 pounds/ 100 pounds

=>1,696 pounds.

total units of flakes produced = 3200 * 24/100

=>768 pounds.

total cost to produce the output =( 3200 pounds * $4 per pound) + 7600 labor cost

=>$12,800.+7600

=>$20,400.

sale value of tails = 1696 pounds *20 per pound

=>$33,920.

sale value of flakes =768 pounds *14.40 =>11,059.20.

total sale value = 33,920+11,059.20

=>$44,979.20.

cost allocated to tails = 20,400 total cost * 33,920 sale value of flakes / 44,979.20 total sale value

=>$15,384.18

cost allocated to flakes = 20,400 total cost* 11,059.20 / 44,979.20

=>$5,015.82.

	tails	flakes
cost allocated to goods sold (15,384.18*1552/1696) (5015.82*686/768)	14,078	4,480
cost allocated to ending inventory (15,384.18-14,078) (5015.82-4480)	1,306	536