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 a) Allocate the common cost of this expedition using the Sales Value at Splitoff Method. Use at 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 48,000 $20.00 $175,000 35,000 $30.00 Kg caught Price per kg if sold as caught ($) Processing costs to make steaks ($) #kg of steaks produced Selling price per kg if made into steaks ($) Swordfish 41,600 $25.00 $132,000 32,000 $45.00 Dogfish 10,000 $0.25 Put your solution below: 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 The last expedition had a total catch of 100,000 kg. Of this catch 40% was lobster, 30% was crab, 20% 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 Total Catch NRV of Byproduct 130,000 $ 100,000 kg 3,000 kg% Lobster 40% 40,000 12.00 3.50 15.00 Actual KG Caught Price at Splitoff (per kg) Processing Costs (per kg) Final Selling Price Crab 30% 30,000 8.00 3.00 13.00 Shrimp Starfish 20% 10% 20,000 10,000 9.00 0.30 3.50 14.00 Total 100% 100,000
