Part A: - Freshtown Fisheries owns a fishing boat which catches lobsters, crabs and shrimp. Unfortunately Freshtown also occasionally catches starfish in its traps along with its main catch. These starfish are not edible, but are high in nitrogen and can be sold to a local composting factory for $.30 per kg. As a byproduct starfish are accounted for under the production method. Freshtown can sell each main product to a local restaurant or can make them into sushi (ie. lobster sushi, crab sushi, shrimp sushi) and then sell to the restaurants. It costs $130,000 in common costs each time the boat goes out to sea on a fishing expedition. Below is data about the choices Freshtown must make: Lobster Crab Shrimp Starfish Price per kg if sold as caught ($) $12.00 $8.00 $9.00 $.30 Processing costs per kg to make sushi ($) $3.50 $3.00 $3.50 Selling price per kg if made into sushi ($) $15.00 $13.00 $14.00 was shrimp as 10% was starfish. a) Allocate the joint cost of this expedition using the NRV method. (8 marks) b) Freshtown sold 9,000 kg of Starfish. Prepare all required journal entries to record the production and sale of Starfish (use the production method). (2 marks) Common cost per trip 130,000 $ Total Catch 100,000 kg NRV of Byproduct 3,000 Lobster Crab Shrimp Starfish Total Kg % 40% 30% 20% 10% 100% Actual KG Caught 40,000 30,000 20,000 10,000 100,000 Price at Splitoff (per kg) 12.00 8.00 9.00 0.30 Processing Costs (per kg) 3.50 3.00 3.50 Final Selling Price 15.00 13.00 14.00SOH Allocation Spivey Co. has two service departments (A & B) and two production departments (1 & 2). Budgeted costs and budgeted activity in the various departments for the current year are shown below: Service Production Depts Depts A B 1 2 Departmental Costs $126,000 $70,000 $300,000 $500,000 Square meters occupied 1,000 2,500 8,000 10,000 Number of employees 20 30 150 200 Machine hours used 0 0 40,000 60,000 Department A is allocated first based on the Number of employees, and Department B is allocated second based on the Square meters occupied. Required - Using the Step-Down Method to allocate the service department costs to the production departments. Round all final answers to the nearest dollar. Data: A B 1 2 Departmental Costs 126,000 70,000 300,000 500,000 Square meters occupied 1,000 2,500 8,000 10,000 Number of employees 20 30 150 200 Machine hours used 40,000 60,000 Data Sheet2 Sheet3 Sheet4 Sheet5 +Philco Fisheries: Part B Part B: -Freshtown Fisheries also has a larger deep-sea fishing vessel that catches tuna, swordfish and dogfish. Each deep sea expedition costs $1,500,000. The tuna and swordfish are extremely valuable, but the dogfish have no commercial value except as fertilizer. As a byproduct dogfish are accounted for under the sales method The products can all be sold as is but the tuna and swordfish can be processed into steaks and sold to up-scale seafood restaurants. The last expedition yielded the following catch: Tuna Swordfish Dogfish Kg caught 48,000 kg 41,600 kg 10,000 kg Price per kg if sold as caught ($) $20.00 $25.00 $.25 Processing costs to make steaks ($) $175,000 $132,000 # kg of steaks produced 35,000 kg 32,000 kg Selling price per kg if made into steaks ($) $30.00 $45.00 least 4 decimals in your calculations. Round your answers to the nearest dollar. (5 marks) b) Which products should be made into steaks (show all calculations)? (4 marks) c) Freshtown sold 5,000 kg of Dogfish. Prepare all required journal entries to record the production and sale of Dogfish (use the sales method). (1 mark) Common cost per trip 1,500,000 Tuna Swordfish Dogfish Kg caught 48,000 41,600 10,000 Price per kg if sold as caught ($) $20.00 $25.00 $0.25 Processing costs to make steaks ($) $175,000 $132,000 # kg of steaks produced 35,000 32,000 Selling price per kg if made into steaks ($) $30.00 $45.00
