Answer:
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.
