Flaxco purchases inventory from overseas and incurs the following costs: the cos
ID: 2346667 • Letter: F
Question
Flaxco purchases inventory from overseas and incurs the following costs: the cost of the merchandise is $50,000, credit terms are 2/10, n/30 that apply only to the $50,000; FOB shipping point freight charges are $1,500; insurance during transit is $500; and import duties are $1,000. Flaxco paid within the discount period and incurred additional costs of $1,200 for advertising and $5,000 for sales commissions. Compute the cost that should be assigned to the inventory.$50,000
$53,000
$52,000
$51,500
$53,200
Explanation / Answer
50,000 cost +1500 freight +500 insurance +1000 import duties -1000 disocunt = 52,000 (advertising and sales commissions are not part of the inventory) answer: $52,000
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