Majik Carpet Was Having Problem Selling Inventory Item #371 So

question 8

Essay

Majik Carpet was having problem selling inventory item #371 so the owner decided to place that item with a consignee to see if they could sell it. The consignee still had the carpet at June 30, 2020 and it was mistakenly not included in the ending inventory count. Indicate the amount of any over or understatement of net income for the month of June as a result of this error

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Definitions:

Inventory Carrying Cost Rate

The total cost associated with holding inventory over a given period, often expressed as a percentage of the inventory value, including costs related to storage, insurance, taxes, and depreciation.

Reams

A measure of paper quantity, traditionally consisting of 500 sheets of paper.

Order Cost

The total expense incurred in placing and processing an order, including administrative expenses, shipping charges, and any other relevant costs.

Carrying Cost

The total cost of holding inventory, including storage, insurance, and opportunity costs, among others.