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 $15.70 per pound. On average, 100 pounds of lobster are processed into 56 pounds of tails and 25 pounds of flakes, with 19 pounds of waste. Assume that the company purchased 3,800 pounds of lobster for $4 per pound and processed the lobsters with an additional labor cost of $6,100. No materials or labor costs are assigned to the waste. If 1,992 pounds of tails and 861 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

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		Yield per	Market value per				Costs to be	Allocated Cost 3,800	Cost per
		3800 lb Pur	3800 lb Pur	% of Market Value			Allocated	Pound Purchase	Pound
			$20*2,128	Numerator	Denominator	% of Market Value
		e	$15.70*950			a	b	c=a*b	c/e
Tails		2,128	$                       42,560.00	$   42,560.00	$     57,475.00	74.05%	$        6,100	$                      4,517.02	$     2.12
Flakes		950	$                       14,915.00	$   14,915.00	$     57,475.00	25.95%	$        6,100	$                      1,582.98	$     1.67
Total			$                       57,475.00
Allocated Cost of Sold Items:
	Cost per Pound	Pound Sold	Cost of Goods Sold
Tails	$                   2.12	1992	$                          4,228.34
Flakes	$                   1.67	861	$                          1,434.68
Total			$                          5,663.02
Allocated cost of Ending Inventory:
	Cost per Pound	Pound Sold	Cost of Inventory Sold
Tails	$                   2.12	136	$                             288.68
Flakes	$                   1.67	89	$                             148.30
Total			$                             436.98