Answer:
$0.18
Explanation:
In this question, we are asked to calculate the cost per item in group 1 using the relative sales value method.
What do we understand by the relative sales value method?
The relative sales value method works with a joint production process. Basically, it allocated cost based on relative sales value of each resulting from a joint production process.
We proceed to calculate the cost per item in group 1 using the following mathematical approach below;
Group one will result in 2,320*$.15= $348 of sales
Group two will result in 5,140*$.28 =$1,439 of sales
Group three will result in 340*$0.64 = $218 of sales
Total sales should be the sum of these three groups = $218 + $1,439 + $348 = $2005
Group one is $348/$2,005 or 17.4percent of the sales, so we use 17.4 percent of the purchase price.
$2,400 *.174 = $417.6 for all of group one.
Divide by the number of pieces to find cost per item
$417.6/2320 = $0.18
Answer:
$0.18
Explanation:
Group 1 consists of 2,320 pieces that are expected to sell for$0.15 each= 2,320×0.15 =$348
Group 2 consists of 5,140 pieces that are expected to sell for 0.28each= 5,140×0.28 =$1,439.2
Group 3 consists of 340 pieces that are expected to sell for $0.69each= 340×0.64= $217.6
Total = $2,004.8
Cost assigned to group 1= 348/2004.8 ×2400 = 416.60
cost assigned to group 1 = 348/ 2,004.8× 2400 = 416.60
cost assigned to group 3 = $217.6/2004.8×2400 = 260.49
cost per item in group 1 = 416.60 / 2320= $0.179 approximately $0.18
