Turner corporation acquired two inventory items at a lump sum cost of $100,000.

Question

Turner corporation acquired two inventory items at a lump sum cost of $100,000. The acquisition included 3,000 units of product LF, and 7000 units of product 1B. LF normally sells for $30 per unit and 1B for $10 per unit. If Turner sells 1000 units of LF what amount of gross profit should it recognize? a) $3750 b) $11250 c) $20000 d) 23,750
I know the answer is B but i do not know why it is B. Can someone please explain? Turner corporation acquired two inventory items at a lump sum cost of $100,000. The acquisition included 3,000 units of product LF, and 7000 units of product 1B. LF normally sells for $30 per unit and 1B for $10 per unit. If Turner sells 1000 units of LF what amount of gross profit should it recognize? a) $3750 b) $11250 c) $20000 d) 23,750
I know the answer is B but i do not know why it is B. Can someone please explain? a) $3750 b) $11250 c) $20000 d) 23,750
I know the answer is B but i do not know why it is B. Can someone please explain?

Explanation / Answer

ANSWER- b- $ 11250 Total Selling price(3000*30)+ (7000*10)=                                   160000 Total acquisition price 100000 Overall Gross profit(160000-100000) 60000 Proportion of cost for 3000 units of LF = 100000/160000*90000 56250 So, cost of 3000 units of LF 56250 Cost of 1000 units of LF =56250/3000*1000 18750 Sale price of 1000 units of LF 1000*30 30000 So, gross profit to be rwcognised for 1000 units of LF =(30000-18750) 11250

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