Teruba Melons purchased a truckload of watermelons weighing 3,000 pounds for $900.The company separated the melons into two grades: superior and economy.The superior grade melons have a total weight of 2,400 pounds and the economy grade melons total 600 pounds.The company sells the superior grade at $0.60 per pound and the economy grade at $0.30 per pound.How much of the $900 cost of the truckload will be allocated to the superior grade melons using the physical quantity method? Use five significant digits in calculations.

Question

Quizplus · Accepted Answer

The physical quantity method allocates costs based on the proportion of physical quantity. The superior grade melons weigh 2,400 pounds out of a total of 3,000 pounds. Therefore, the cost allocation for superior grade melons is (2,400 / 3,000) * $900 = 0.8 * $900 = $720.

Teruba Melons Purchased a Truckload of Watermelons Weighing 3,000 Pounds