Management Accounting

inelliow versus the it euptocalmnetout Explain your aliswel. Question 3 (8 marks) Wharf Fisheries is a fishing company in St. John's, Newfoundland. It fishes in Atlantic Ocean using big ocean fishing nets. Each catch may include a variety of fish and other seafood such Atlantic Salmon, Cod, turbot, lobsters, tuna, and other species. The company cannot control exactly what types of fish it catches in each fishing expedition although the fish fix is relatively stable in a fishing season. All fishing boats send their catches to the company's process plant in St. John's, where different fish are sorted out and packaged and sold to restaurant chains and large seafood retail distributors in Canada. Some fish such as tuna, lobsters and turbot may require further processing at the plant for export to Asia. Less valuable fish are sold as by- products to companies to make animal feed or cat food. To keep the accounting system simple, the company has always assigned all fishing and processing costs by the weight of the final finished product. However, with increased competition it has to watch its prices closely for itsproducts. In recent years several products have incurred zero profit margins while a few other products appear extremely profitable. After several weeks of investigation, you as a consultant to the Company, has found that while weight is important in processing of seafood, some seafood products have very distinct processing steps and some products are processed through more steps than others in order to meet exporting requirements. In addition, you found that market values of different seafood products vary widely, with by-products worth little while tuna and lobster are selling at premium prices overseas. Required: Based on the findings of your investigation, what changes might you recommend to the company in the way of cost allocation among its products? How would the company benefit from implementing your recommendations? In addition, how should the company assess the profitability of its different seafood products based on your investigation/observation