Robertson Corporation acquired two inventory items at a lump-sum cost of $40,000.The acquisition included 3,000 units of product CF, and 7,000 units of product 3B.CF normally sells for $12 per unit, and 3B for $4 per unit.If Robertson sells 1,000 units of CF, what amount of gross profit should it recognize?

Question

Quizplus · Accepted Answer

The total sales value of CF is $36,000 (3,000 units x $12) and for 3B is $28,000 (7,000 units x $4). The total sales value is $64,000. The allocation of the lump-sum cost to CF is $22,500 ($40,000 x $36,000/$64,000). The cost per unit of CF is $7.50 ($22,500/3,000 units). The gross profit for selling 1,000 units of CF is $4,500 [(1,000 units x $12) - (1,000 units x $7.50)].

Robertson Corporation Acquired Two Inventory Items at a Lump-Sum Cost