Question

Oriole Corporation acquired two inventory items at a lump-sum cost of $123000. The acquisition included 3090 units of product LF, and 6180 units of product 1B. LF normally sells for $30 per unit, and 1B for $10 per unit. If Oriole sells 1030 units of LF, what amount of gross profit should it recognize?

Answer 1

$6,304

Step-by-step explanation:

Calculation for what amount of gross profit should it recognize

First step is to calculate the total value sales

Total value sales

3090 units* $30 per=92,700

6180 units *$10 per unit=61,800

Total value sales=154,500

Second step is to calculate the cost per unit

Cost per unit=(92,700/154,500)*$123000/3090

Cost per unit=0.6*123,000/3090

Cost per unit=73,800/3090

Cost per unit=23.88

Now let calculate gross profit using this formula

Gross profit=Sales -Cost

Let plug in the formula

Gross profit=1,030*(30-23.88)

Gross profit=1,030*6.12

Gross profit=$6,304

Therefore the amount of gross profit that should it recognize is $6,304