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11 November, 22:12

Colicchio Corporation acquired two inventory items at a lump-sum cost of $60,000. The acquisition included 3,000 units of knife X001, and 3,000 units of knife X002. X001 normally sells for $20 per unit, and X002 for $10 per unit. If Colicchio sells 1,000 units of X002, what amount of gross profit should it recognize?

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  1. 11 November, 22:36
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    X001 Sales volum = 3000*$20 = $60,000

    X002 Sales volum = 3000*$10 = $30,000

    Total $90,000

    Allocated to X002 based on sales volum is 33.33% (30,000/90,000) of the 60,000, which is $20,000

    Cost per unit of X002 is $6.67 ($20,000/3,000). Sells 1000 units, $6.67*1000 = $6670.

    Gross profit = Revenue $10,000 - Cost $6670 = $3330 in gross profit
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