Hargrove Inc

question 91

Essay

Hargrove Inc.is a distributor of grains and other farm commodities,which it buys directly from the farmers.Hargrove contracts with National Bakery Association to sell and deliver 1,000 tons of wheat during August.The wheat is to be delivered by rail (train).During July,before the wheat was shipped,the railroads went on strike.The wheat could not be shipped by train.However,the grain could be shipped by truck,but only at a cost double that of trains.Hargrove refused to ship the wheat at the extra expense.National sues for breach of contract.It should be noted that the trains have gone on strike four times in the past ten years,and that there was talk of a strike before this contract was created.Who will win in this lawsuit and why?

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Definitions:

Lower Of Cost

An accounting principle where the inventory is recorded at either its historical cost or market value, whichever is lower, to report assets conservatively.

Total Inventory Value

The total cost of all items held in inventory by a business, calculated at a specific point in time.

Net Realizable Value

The projected price at which goods are sold, minus the expenses associated with their sale or disposal.

Gross Profit

The profit a company makes after subtracting the costs associated with making and selling its products, or the costs associated with providing its services.