Oceanic Products is a tuna fishing company based in San Diego. It has three divisions:

a. Tuna Harvesting – operates a fleet of 20 trawling vessels.

b. Tuna Processing – processes the raw tuna into tuna fillets.

c. Tuna Marketing – packages tuna fillets in 2-pound packets that are sold to wholesale distributors at $12 each.

The Tuna Processing Division has a yield of 500 pounds of processed tuna fillets from 1,000 pounds of raw tuna provided by the Tuna Harvesting Division. The Tuna Marketing Division has a yield of 300 2-pound packets from every 500 pounds of processed tuna fillets provided by the Tuna Processing Division. (The weight of the packaging material is included in the 2-pound weight.) Cost data for each division are as follows:

Tuna Harvesting Division:

Variable costs per pound of raw tuna $0.20

Fixed costs per pound of raw tuna $0.40

Tuna Processing Division:

Variable costs per pound of processed tuna $0.80

Fixed costs per pound of processed tuna $0.60

Tuna Marketing Division

Variable costs per 2-pound packet $0.30

Fixed costs per 2-pound packet $0.70

Fixed costs per unit are based on the estimated quantity of raw tuna, processed tuna, and 2-pound packets to be produced during the current fishing season.

Oceanic Products has chosen to process internally all raw tuna brought in by the Tuna Harvesting Division. Other tuna processors in San Diego purchase raw tuna from boat operators at $1 per pound. Oceanic Products has also chosen to process internally all tuna fillets into the 2-pound packets sold by the Tuna Marketing Division. Several fish-marketing companies in San Diego purchase tuna fillets at $5 per pound.

Compute the overall operating income to Oceanic Products of harvesting 1,000 pounds of raw tuna, processing it into tuna fillets, and then selling it in 2-pound packets. please provide an explanation.

Answer rating: 100% (QA)

ANSWER Operating income for harvesting raw tuna 1000 pounds x 1 020 040 400 Operating income for p... View the full answer