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late penalties

Hi. I have a student who completed a couple of quizzes on time, and today, as preparation for the test, he  re-took them (which he could do because he had unused attempts). I would have expected that, first, all penalties would be applied as appropriate for each attempt, and then, the highest grade would be the one recorded in his list of grades. (So in that case, his perfect score achieved before the due date wouldn't be affected by retaking the quizzes after the due date.)

What happens instead is that his highest grade is identified and then the late penalty is applied to it---even if the highest grade was made before the due date. I do have "highest" selected as the option for which grade is recorded. But anyway, it's not that his most recent attempt is the one that is recorded. It's a previous (higher and on-time) attempt to which the penalty is being applied.

Am I missing something? I know that I can delete the penalty, but is there a setting that won't make this an issue at all? The way that it is now seems like an obvious bug.

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