Pirate Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $21 per pound and the flakes for $14 per pound.

Exercise 24-13B Joint product costs assigned LO C3

Pirate Seafood Company purchases lobsters and processes them into tails and flakes. It sells the lobster tails for $21 per pound and the flakes for $14 per pound. On average, 100 pounds of lobster are processed into 52 pounds of tails and 22 pounds of flakes, with 26 pounds of waste. Assume that the company purchased 2,400 pounds of lobster for $4.50 per pound and processed the lobsters with an additional labor cost of $1,800. No materials or labor costs are assigned to the waste. If 1,096 pounds of tails and 324 pounds of flakes are sold, calculate the allocated cost of the sold items and the allocated cost of the ending inventory. (Round cost per pound answers to 2 decimal places.) Explanation: Preliminary calculations          Lobster cost (2,400 lbs. × $4.50) $ 10,800     Labor cost   1,800        Total cost of processed lobsters $ 12,600            Parts Quantity* Price Total   Lobster tails 1,248  lbs. $ 21   $ 26,208     Lobster flakes 528  lbs.   14     7,392                Total market value         $ 33,600                  *Quantities are computed as: 52% × 2,400 lbs. = 1,248 lbs. 22% × 2,400 lbs. =    528 lbs.   Allocated cost—value basis of allocation: $12,600      Parts Market Value % of Total Allocated Cost Cost per lb.   Lobster tails $ 26,208   78.0 % $ 9,828   $ 7.875     Lobster flakes   7,392   22.0 %   2,772   $ 5.250            Total $ 33,600   100.0 % $ 12,600                (1) Cost of goods sold   Parts Quantity (given) Cost Total   Lobster tails 1,096  lbs. $ 7.875   $ 8,631     Lobster flakes 324  lbs.   5.250     1,701                Total cost of goods sold         $ 10,332                (2) Cost of ending inventory   Parts Quantity Cost Total   Lobster tails 152  lbs.* $ 7.875   $ 1,197     Lobster flakes 204  lbs.**   5.250     1,071                 Total inventory cost         $ 2,268                 * 1,248 lbs.– 1,096 lbs. sold = 152 lbs. **  528 lbs. – 324 lbs. sold = 204 lbs. Note: Cost of goods sold ($10,332) plus cost of ending inventory ($2,268) equals the total cost of $12,600.