Pirate Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $20.30 per pound and the flakes for $15.30 per pound. On average, 100 pounds of lobster are processed into 58 pounds of tails and 26 pounds of flakes, with 16 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 $7,400. No materials or labor costs are assigned to the waste. If 1,722 pounds of tails and 752 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.)

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Business

Catwoman

26 January, 20:26

Pirate Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $20.30 per pound and the flakes for $15.30 per pound. On average, 100 pounds of lobster are processed into 58 pounds of tails and 26 pounds of flakes, with 16 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 $7,400. No materials or labor costs are assigned to the waste. If 1,722 pounds of tails and 752 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.)

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Caylee Novak · Answer 1

Pirate Seafood Company

1) Calculation of the Allocated Cost of Sold Items:

a) Production Units:

Lobster tails = 3,200/100 * 58 = 1,856 units

Lobster flakes = 3,200/100 * 26 = 832 units

Total units = 2,688 units, costing $12,800

b) Material costs:

Lobster tails = 1,856/2,688 * $12,800 = $8,838

Lobster flakes = 832/2,688 * $12,800 = $3,962

c) Labor costs:

Lobster tails = 1,856/2,688 * $7,400 = $5,110

Lobster flakes = 832/2,688 * $7,400 = $2,290

d) Total Production costs (Materials & Labor):

i) Lobster tails = $8,838 + $5,110 = $13,948

per unit cost = $13,948/1,856 = $7.52

ii) Lobster flakes = $3,962 + $2,290 = $$6,252

per unit cost = $6,252/832 = $7.51

e) Cost of Sales:

Lobster tails = $7.52 x 1,722 = $12,949.44

Lobster flakes = $7.51 x 752 = $5,647.52

2) Calculation of the Allocated Cost of Ending Inventory:

a) Ending Inventory units:

Lobster tails = Production unit Minus Sales unit = 1,856 - 1,722 = 134

Lobster flakes = Production unit Minus Sales unit = 832 - 752 = 80

b) Ending Inventory costs:

Lobster tails = 134 x $7.52 = $ 1,007.68

Lobster flakes = 80 x $7.51 = $600.80

Explanation:

To calculate the costs of sales and the costs of ending inventory, the first step is to calculate the units produced. The material and labour costs are then apportioned based on the units produced since no costs are allocated to the waste.

Then, the unit costs of tails and flakes are calculated. These form the bases for computing the cost of items sold and the ending inventory.