Anderson Company Pays a Flat Fee of £500 for the Right

question 56

Essay

Anderson 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, 1000 dozen; bogey quality, 3,000 dozen; and duffer quality, 2,000 dozen.
a.Determine the cost and gross profit per cent for each type of golf ball using the physical units method of joint cost allocation.
b.Repeat part (a) using the sales-value-at-split-off method of joint cost allocation.
c.The company has an opportunity to sell bogey quality balls for £4.50 per dozen to a company that operates golf driving ranges; however, the balls will have to be painted and striped. The company estimates that the cost of painting and striping will be 60 cents per dozen. Assuming the physical unit method is used to allocate joint costs, should the offer be accepted?

---

Definitions:

Disorganized-Disoriented Attachment

A type of insecure attachment where children exhibit a lack of clear attachment behavior, often due to inconsistent or traumatic caregiving.

Autistic Infants

Infants showing early signs of autism spectrum disorder, characterized by challenges with social interaction, communication, and repetitive behaviors.

Babble Excessively

The act of talking in a rapid, incoherent, or nonsensical manner, often without clear intent or understanding, typically observed in very young children as a stage of language development.

Positive Reactions

Responses that are favorable or beneficial, often characterized by acceptance, happiness, or support.