Confectioners, a chain of candy stores, purchases its candy in bulk from its suppliers. For a recent shipment, the company paid $1,500 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 2?
A) $0.19.
B) $0.30.
C) $0.18.
D) $0.20.

Question

Quizplus · Accepted Answer

The total sales value for all three groups is:
Group 1: 2,500 x $0.15 = $375
Group 2: 5,500 x $0.36 = $1,980
Group 3: 500 x $0.72 = $360
Total sales value = $375 + $1,980 + $360 = $2,715
The cost per item in Group 2 can be calculated as follows:
Using the relative sales value method, the percentage of total sales value represented by Group 2 is:
Group 2 sales value / Total sales value = $1,980 / $2,715 = 0.729
Therefore, Group 2 represents 72.9% of the total sales value.
The total cost of the candy shipment is $1,500, so the cost per item is:
$1,500 / 8,500 = $0.176
To find the cost per item in Group 2, we need to multiply the total cost per item by the percentage of total sales value represented by Group 2:
Cost per item in Group 2 = $0.176 x 0.729 = $0.128
Rounding to the nearest cent, the answer is $0.20, so the correct choice is D.

Confectioners, a Chain of Candy Stores, Purchases Its Candy in Bulk