Question
Henderson Company pays a flat fee of $500 for the right to retrieve stray golf balls from lakes and ponds at golf and country clubs.
Henderson Company pays a flat fee of $500 for the right to retrieve stray golf balls from lakes and ponds at golf and country clubs. The recovered balls are then cleaned, graded as to quality (birdie, bogey, or duffer), and sold to sporting goods stores at the following prices per dozen: birdie quality, $5; bogey quality, $4; and duffer quality, $3. Last month $8,000 of cost was incurred retrieving the following quantities of golf balls: birdie quality, 1,000 dozen; bogey quality, 3,000 dozen; and duffer quality, 2,000 dozen.
(Calculate relative quantity to three decimal points.)
a. Determine the allocated cost for each type of golf ball using the physical units method of joint cost allocation.
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