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Gene Started a Business That Retrieves Golf Balls from Lakes

Question 119

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Gene started a business that retrieves golf balls from lakes and surrounding areas at the local greens. The recovered balls are cleaned and then assessed based on quality and priced to sell to the local sporting goods store. Birdie golf balls are sold for $5 per dozen, Bogey golf balls are sold at $4 a dozen, and Duffer golf balls are sold at $3 per dozen. Costs incurred last month amounted to $8,000 and produced (in dozens) 1,000 Birdie, 3,000 Bogey, and 2,000 Duffer. A dozen golf balls (no matter the quality) weigh 2lbs. Instructions:
a.If Gene uses the sales value at split-off method, how much in joint costs will be allocated to each product?
b.If Gene uses the physical quantities method, how much in joint costs will be allocated to each product?
c.Using the sales value at split-off method, how much will Gene recognize as gross profit for each product?
d.Using the physical quantities method, how much will Gene recognize as gross profit for each product?

Correct Answer:

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a. Birdie - $1,739
Bogey - $4,174
Duffer...

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