Question

Robertson Corporation acquired two inventory items at a lump-sum cost of $96,000. The acquisition included 3,000 units of product CF, and 7,000 units of product 3B. CF normally sells for $27 per unit, and 3B for $9 per unit. If Robertson sells 1,000 units of CF, what amount of gross profit should it recognize?

		$3,000.
		$9,000.
		$18,000.
		$24,000.

Answer 1

Cost allocated using sales value method
	No. of units purchased N	Price P	Total cost should be N*P	% allocated A	Cost to be allocated B	Cost allocated C=A*B	No. of units purchased N	Cost per unit C/N	No. of units sold	Total cost
CF	3000	$27	$81,000	56.25	$96,000	$54,000.00	3000	$18.00	1000	$18,000.00
3B	7000	$9	$63,000	43.75	$96,000	$42,000.00	7000	$6.00
		Total	$144,000
	sales (1000*27)	$27,000
	Less: COGS	$18,000.00
	Gross profit	$9,000.00
	Option B $9000
If any doubt please comment. If satisfied you can rate the answer