Pike Seafood Company purchases lobsters and processes them into tails and flakes
ID: 2372660 • Letter: P
Question
Pike Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $20 per pound and the flakes for $15 per pound. On average, 100 pounds of lobster are processed into 57 pounds of tails and 24 pounds of flakes, with 19 pounds of waste. Assume that the company purchased 3,000 pounds of lobster for $6.00 per pound and processed the lobsters with an additional labor cost of $1,800. No materials or labor costs are assigned to the waste. The company sold 1,510 pounds of tails and 710 pounds of flakes.
What is the allocated cost of the sold items? The company allocates joint costs on a value basis.(Round your cost per pound to 2 decimal places. Omit the "$" sign in your response.)
(2)
What is the allocated cost of the ending inventory? The company allocates joint costs on a value basis. (Round your cost per pound to 2 decimal places. Omit the "$" sign in your response.)
Pike Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $20 per pound and the flakes for $15 per pound. On average, 100 pounds of lobster are processed into 57 pounds of tails and 24 pounds of flakes, with 19 pounds of waste. Assume that the company purchased 3,000 pounds of lobster for $6.00 per pound and processed the lobsters with an additional labor cost of $1,800. No materials or labor costs are assigned to the waste. The company sold 1,510 pounds of tails and 710 pounds of flakes.
Explanation / Answer
Cost of tails $57 x $20=1140
Cost of flakes $24 x $15=360
Total 1500
# generated from 3000 pounds
tails: 3000 x 57/100=1710
flakes: 3000 x 24/100=720
Remember only 1510 tails and 710 flakes were sold.
Cost of manufacturing:
3000 pounds x $6+1800=$19800 total
Allocated cost of tails sold= $19800 x (1140/1500)=$15048
Cost per unit tails sold= $15048/1710 total tails produced =$8.8/unit tails
Allocated cost of flakes sold= $19800 x (360/1500)=$4752
Cost per unit flakes sold=$4752/720 total flakes produced=$6.6/unit flakes
Cost of goods sold:
For 1510 tails sold:
1510 x $8.8=$13288
For 710 flakes sold:
710 x $6.6=$4686
Ending Inventory:
What inventory is remaining after goods sold?
1710-1510=200 tails
720-710=10 flakes
200 tails x $8.8=$1760
10 flakes x $6.6=$66