**Problem Statement:**Sandhill Corporation acquired two inventory items at a lump-sum cost of $128,000. The acquisition included 3,240 units of product LF, and 6,480 units of product 1B. LF normally sells for $30 per unit, and 1B for $10 per unit. If Sandhill sells 1,080 units of LF, what amount of gross profit should it recognize?**Answer Options:**- $22,267- $32,400- $36,720- $6,800**Explanation:**The question involves calculating the gross profit recognized from the sale of a specific number of units from a bulk purchase. Gross profit is calculated by determining the sales revenue from the sold units minus the allocated cost of those units sold. To solve the problem:1. Calculate the total estimated retail value of inventory for both products.2. Allocate the lump-sum cost proportionately based on the retail value.3. Calculate the sales revenue for the units sold.4. Determine the cost of goods sold (COGS) for these units.5. Subtract COGS from sales revenue to find the gross profit.Note: No graphs or diagrams are included in the original image to elaborate on.

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Description: **Problem Statement:**Sandhill Corporation acquired two inventory items at a lump-sum cost of $128,000. The acquisition included 3,240 units of product LF, and 6,480 units of product 1B. LF normally sells for $30 per unit, and 1B for $10 per unit. I

Total Sale Value of all the units =(3240×30)+(6480×10)=97,200+64,800=162,000…

Business

Accounting

Sandhill Corporation acquired two inventory items at a lump-sum cost of $128000. The acquisition included 3240 units of product LF, and 6480 units of product 1B. LF normally sells for $30 per unit, and 1B for $10 per unit. If Sandhill sells 1080 units of LF, what amount of gross profit should it recognize? $2267. O $32400. O$36720. O $6800.

Sandhill Corporation acquired two inventory items at a lump-sum cost of $128000. The acquisition included 3240 units of product LF, and 6480 units of product 1B. LF normally sells for $30 per unit, and 1B for $10 per unit. If Sandhill sells 1080 units of LF, what amount of gross profit should it recognize? $2267. O $32400. O$36720. O $6800.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

Topic Video

Question

**Problem Statement:**

Sandhill Corporation acquired two inventory items at a lump-sum cost of $128,000. The acquisition included 3,240 units of product LF, and 6,480 units of product 1B. LF normally sells for $30 per unit, and 1B for $10 per unit. If Sandhill sells 1,080 units of LF, what amount of gross profit should it recognize?

**Answer Options:**

- $22,267
- $32,400
- $36,720
- $6,800

**Explanation:**

The question involves calculating the gross profit recognized from the sale of a specific number of units from a bulk purchase. Gross profit is calculated by determining the sales revenue from the sold units minus the allocated cost of those units sold. To solve the problem:

1. Calculate the total estimated retail value of inventory for both products.
2. Allocate the lump-sum cost proportionately based on the retail value.
3. Calculate the sales revenue for the units sold.
4. Determine the cost of goods sold (COGS) for these units.
5. Subtract COGS from sales revenue to find the gross profit.

Note: No graphs or diagrams are included in the original image to elaborate on.

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