Answer:
The amount of gross profit Turner Corporation should recognize is $20,000.
Explanation:
The following are given in the question:
Lump-sum cost = $100,000
Units of LF acquired = 3,000
Units of 1B acquired = 7,000
LF price per unit = $30
1B price per unit = $10
Unit of LF sold = 1,000
Therefore, we have:
Share of LF in the Lump-sum cost = (Units of LF acquired / (Units of LF acquired + Units of 1B acquired)) * Lump-sum cost = (3,000 / (3,000 + 7,000)) * $100,000 = $30,000
LF cost per unit = Share of LF in the Lump-sum cost / Units of LF acquired = $30,000 / 3,000 = $10
LF total revenue = Unit of LF sold * LF price per unit = 1,000 * $30 = $30,000
LF cost of goods sold = Unit of LF sold * LF cost per unit = 1,000 * $10 = $10,000
LF gross profit = LF total revenue - LF cost of goods sold = $30,000 - $10,000 = $20,000
Therefore, the amount of gross profit Turner Corporation should recognize is $20,000.
