Hasham Purchases Inventory from Overseas and Incurs the Following Costs

question 33

Multiple Choice

Hasham purchases inventory from overseas and incurs the following costs: the merchandise cost is $80,000,credit terms 1/10,n/30,applicable only to the $80,000;FOB shipping point freight charges are $2,500;insurance during transit is $300;and import duties are $1,500.Hasham paid within the discount period.Compute the cost that should be assigned to the inventory.

• A)$83,500
• B)$79,200
• C)$81,700
• D)$84,300
• E)$81,000

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Definitions:

Replacement Cost

The cost to replace an asset with another of similar quality and functionality at current market prices.

Cost Of Completion

the estimated total expense required to finish a project, product, or service, often used in budgeting and financial projection.

Normal Profit

The minimum profit necessary for a company to remain competitive in its market, covering its opportunity costs.

Replacement Cost

The cost required to replace an asset with a new one of similar kind and quality at current prices.