Problem 7-15 Vaughn West is a commercial fisherman, and he has just returned fro
ID: 2554805 • Letter: P
Question
Problem 7-15 Vaughn West is a commercial fisherman, and he has just returned from a trip off the coast of Maine. He has cakculated the cost of his catch as Wages of deckhands Vaughn's wage Food, medical supplies, etc. Depreciation of netting and other equipment Depreciation of boat Fuel $35,400 16,800 6,700 5,600 12,800 17,500 $94.800 Total Vaughn's nets yelded a catch of 15,000 pounds of salmon, 23,250 pounds of halibut, and 36, 75o pounds of fhounder Salmon salls for $10.00 per pound, halbut for $6.00 per pound, and flounder for $4.00 per pound Allocate joint costs based on weight. With these costs, what is the proft associated with each type of fishi Salmon Halbut Flounder Allocate joint costs based on relative sales values. With these costs, what is the proft associated with each type of fish? (Hound relative sales value propartion percent to a det inaal places, ng. 32.954% and final answers to 0 dnimal places, e.g. 12s.) Salmon Halibut O Type here to searchExplanation / Answer
1. Allocation of Joint Cost based on weight. and profit associated with each type of fish.
Total no of Pounds = 15,000 + 23,250 + 36,750
= 75,000
Profit from Salmon = Sales - Joint cost Allocated
= (15000 * $ 10) - ($ 94,800 * 15,000 / 75,000)
= $ 150,000 - $ 18,960
= $ 131,040
Profit from Halibut = Sales - Joint cost Allocated
= (23,250 * $ 6) - ($ 94,800 * 23,250 / 75,000)
= $ 139,500 - $ 29,388
= $ 110,112
Profit from Flounder = Sales - Joint cost Allocated
= (36,750 * $ 4) - ($ 94,800 * 36,750 / 75,000)
= $ 147,000 - $ 46,452
= $ 100,548
2. Allocation of Joint Cost based on Sales Value and profit associated with each type of fish.
Total Sales Value = $ 150,000 + $ 139,500 + $ 147,000
= $ 436,500
Profit from Salmon = Sales - Joint cost Allocated
= (15000 * $ 10) - ($ 94,800 * $ 150,000 / $ 436,500)
= $ 150,000 - $ 32,577
= $ 117,423
Profit from Halibut = Sales - Joint cost Allocated
= (23250 * $ 6) - ($ 94,800 * $ 139,500 / $ 436,500)
= $ 139,500 - $ 30,297
= $ 109,203
Profit from Flounder = Sales - Joint cost Allocated
= (36750 * $ 4) - ($ 94,800 * $ 147,000 / $ 436,500)
= $ 147,000 - $ 31,926
= $ 115,074
3. Net Incremental cash flow of converting the flounder into fish paste is $ 0 (Nill) . Vaughn will be better off by ($ 10,700) (i.e. Addtional cost incurred for better off will be the loss for the Vaughn because the before and after fish paste the sale price of the flounder remain same $ 4 per Pound or say $ 8 Per pound because 1pound of fish paste needed 2 pounf of fish.)