Question

ABC, a chain of candy stores, purchases its candy in bulk from its suppliers. For a recent shipment, the company paid $1,500 and received 8,500 pieces of candy that are allocated among three groups. Group 1 consists of 2,500 pieces that are expected to sell for $0.15 each. Group 2 consists of 5,500 pieces that are expected to sell for $0.36 each. Group 3 consists of 500 pieces that are expected to sell for $0.72 each. Using the relative sales value method, what is the cost per item in Group 2?a. $0.19.b. $0.30.c. $0.18.d. $0.20.

Answer 1

Answer: Option (d) is correct.

Step-by-step explanation:

Amount paid for candy = $1,500

Items received = 8,500 pieces of candy

Group 1 = 2,500 pieces

Selling price = $0.15 each

sale value = pieces sold × Selling price

= 2,500 × $0.15 each

= $375

Group 2 = 5,500 pieces

Selling price = $0.36 each

sale value = pieces sold × Selling price

= 5,500 × $0.36 each

= $1,980

Group 3 = 500 pieces

Selling price = $0.72 each

sale value = pieces sold × Selling price

= 500 × $0.72 each

= $360

Total sale value = $375 + $1,980 + $360

= $2,715

`Percentage\ of\ sale\ in\ Group\ 2=(Sale\ value)/(Total\ sale\ value)* 100`

`Percentage\ of\ sale\ in\ Group\ 2=(1,980)/(2,715)* 100`

= 72.92%

Proportion of cost for Group 2 = cost × Percentage of sale in Group 2

= $1,500 × 72.92%

= $1,093.8

`cost\ per\ unit= (cost)/(total\ units)`

`cost\ per\ unit= (1,093.8)/(5,500)`

= $0.1988

= $0.20(approx)