Question

Turner Corporation acquired two inventory items at a lump-sum cost of $80,000. The acquisition included 3,000 units of product LF, and 7,000 units of product 1B. LF normally sells for $24 per unit, and 1B for $8 per unit.

If Turner sells 1,000 units of LF, what amount of gross profit should it recognize?

a. $3,000b. $9,000.c. $16,000.d. $19,000.

Answer 1

c. $16,000

Step-by-step explanation:

Total cost of both products = $80,000

Units of product LF = 3000

units of product 1B = 7000

Selling price per unit of LF = $24

Selling price per unit of 1B = $8

Cost of 3000 units of LF

= (3000/10000) × 80000

= $24,000

If 3000 units cost $24,000

1000 units would cost

= (1000/3000) × 24000

= $8,000

If Turner sells 1000,

Revenue from the sale

= 1000 × 24

= $24,000

Gross profit from this sale = $24,000 - $8000

= $16,000

The right option is c. $16,000.