Question

Confectioners, a chain of candy stores, purchases its candy in bulk from its suppliers. For a recent shipment, the company paid $1,800 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 $0.15 each. Group 2 consists of 5,500 pieces that are expected to sell for $0.36 each. Group 3 consists of 500 pieces that are expected to sell for $0.72 each.
Using the relative sales value method, what is the cost per item in Group 1?
a. $0.150.b. $0.100.c. $0.120.d. $0.225.

Answer 1

Answer:

correct option is b. $0.100

Explanation:

given data

Group 1 =  2,500 pieces that expected  sell = $0.25 each.

Group 2 = 5,500 pieces that expected  sell = $0.60 each.

Group 3 = 500 pieces that expected  sell =  $1.20 each

company paid  =$1,800

received = 8,500 pieces

to find out

cost per item in Group 1

solution

we get here sale value for all 3 groups that is

sale value for group 1 = 2500 × 0.15 = $375

sale value for group 2 = 5500 × 0.36 = $1980

sale value for group 3 = 500 × 0.72 = $360

so total sale value will be here as

total sale value = $375 + $1980 + $360

total sale value = $2715

now we get here % sale that is for group 1

% sale for group 1 = $\frac{375}{2715}$

% sale for group 1 = 13.81 %

and cost is here $1800

and proportion of cost for group 1 will be

proportion of cost = 1800 × 13.81%

proportion of cost = $248.58

and

cost per unit will be here as

cost per unit  = $\frac{248.58}{2500}$

cost per unit  = 0.10

so correct option is b. $0.100