(a) Compute the inventory value of the units unsold in the hands of the consigne
ID: 2446219 • Letter: #
Question
(a)
Compute the inventory value of the units unsold in the hands of the consignee. (Round answer to 0 decimal places, e.g. 5,275.)
On May 3, 2014, Eisler Company consigned 104 freezers, costing $670 each, to Remmers Company. The cost of shipping the freezers amounted to $870 and was paid by Eisler Company. On December 30, 2014, a report was received from the consignee, indicating that 52 freezers had been sold for $940 each. Remittance was made by the consignee for the amount due after deducting a commission of 6%, advertising of $260, and total installation costs of $330 on the freezers sold.Explanation / Answer
Inventory ( units) unsold = Total units - Units sold
= 104 -52
= 52
Cost of inventory/ per unit = Cost + freight charges
= 670 + 870/104 = 678.37
Total Value of inventory unsold = Number of units unsold * Cost per unit
= 52 * 678.37
= 35275
Sales commission , advertisement and installation charges are administrative expenses and do not form part of inventory cost
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