Confectioners, a chain of candy stores, purchases its candy in bulk from its sup

Question

Confectioners, a chain of candy stores, purchases its candy in bulk from its suppliers. For a recent shipment, the company paid $3,000 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 $0.25 each. Group 2 consists of 5,500 pieces that are expected to sell for 0.60 each. Group 3 consists of 500 pieces that are expected to sell for $1.20 each. Using the relative sales value method, what is the cost per item in group 2?

Explanation / Answer

Sales COST Group 1 consists of 2,500 pieces that are expected to sell for $0.25 each= 2500*.25 =$625 Group 2 consists of 5,500 pieces that are expected to sell for 0.60 each= 5500*.60 =$3300 Group 3 consists of 500 pieces that are expected to sell for $1.20 each= 500*1.2 = $600 total = $4525 cost assigned to group 2 = 3300/4525 * 3000 = 2187.845 cost assigned to group 1 = 625/4525 * 3000 = 414.36 cost assigned to group 3 = 600/4524 * 3000 = 397.79 cost per item in group 2 = 2187.845 / 5500 = $0.39779 = $0.4

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