Question

Pirate Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $19.10 per pound and the flakes for $14.30 per pound. On average, 100 pounds of lobster are processed into 57 pounds of tails and 25 pounds of flakes, with 18 pounds of waste. Assume that the company purchased 3,300 pounds of lobster for $4 per pound and processed the lobsters with an additional labor cost of $6,600. No materials or labor costs are assigned to the waste. If 1,738 pounds of tails and 737 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.) Market Allocated Yield Value Cost Cost Cost per 3.300 lb per 3,300 lb. purchase Percent of Market Value 3,300 allocatedpound pound purchase to be per purchase % of Mkt Numeratenominatoalue Lobster Tails 0 Lobster Flakes Totals 1) What is the allocated cost of the sold items? Cost of Goods Sold Cost per Pounds sold pound Lobster $ Tails 0.00 Lobster $ Flakes 0.00 $ Totals 2) What is the allocated cost of the ending inventory? Bund OO

Answer 1

Market Allocated Answer Yield per Value per 3,300 lb.3,300 lb. purchase purchase Cost to Cost 3,300 Percentage of Market Value be Pound Cost per allocated Purchase pound Numerator Denominator % of Mkt Value Lobster Tails 1881 lbs. $35,927. 10 $35,927.10 $11,797.50 $11,797.50 $47,725 $47,725 $19,800 $19,800 $14,850 $4,950 $7.89 $5.81 75% 825 lbs Lobster Flakes 25% 2,706 lbs. $47,725 Total $19,800 100% 1) Allocated Cost of the sold items Cots per Cost of Pound Pound Sold Goods Sold $7.89 1,738 lbs. $13,712.82 $4,281.97 Lobster Tails $5.81 737 lbs. Lobster Flakes Total $17,995 2) Allocated Cost of the ending inventory Cots per Cost of Pound Sold Goods Sold Pound $7.89 $5.81 143 lbs $1,128.27 $511.28 $1,640 Lobster Tails Lobster Flakes 88 lbs Total

Explanations Cost of processed lobsters Lobster cost (3,300 lbs. x $4.00) $13,200 $6,600 Labor cost Cost of Processed Lobster $19,800 Market Value Quantity Price Total Parts Lobster Tails (see below) Lobster Flakes (see below) $19.10 $35,927.10 $11,797.50 $47,725 1881 lbs $14.30 825 lbs Total Quantities are computed as: Lobster Tails 57/100 x 3,300 lbs 1881 lbs Lobster Flakes 25/100 x 3,300 lbs 825 lbs Allocated cost Value basis of allocation: $19,800 Market Allocated Cost per lbs $7.89 $5.81 Value % of Total Parts Cost Lobster Tails $35,927.10 $11,797.50 $14,850 $4,950 [($14,850/1,881 Ibs.) $7.89] [($4,950/852 lbs.) 75% = $5.81] Lobster Flakes 25% $47,725 $19,800 Total 100% % of Total Lobster Tails = ($35,927.10/$47,725) x 100 75% Lobster Flakes = ($11,797.50/ $47,725) x 100 25% - X Ending Inventory Lobster Tails 1,881 lbs. 1,738 lbs. 143 lbs Lobster Flakes = 825 lbs. 737 lbs. = 88 lbs.