Copyright

On May 3, 2014, Eisler Company consigned 104 freezers, costing $670 each, to Remmers Company. The...

Question:

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. Compute the profit for the consignor for the units sold.

Inventory:

Inventory are those goods which are at different stages of being made for selling purposes. For example Finished goods, Work-in-progress, Raw materials, etc.

Answer and Explanation:

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

= $35,275

Sales commission, advertisement, and installation charges are administrative expenses and do not form part of inventory cost


Learn more about this topic:

Loading...
What Is Inventory? - Definition & Example

from Business 112: Operations Management

Chapter 13 / Lesson 7
36K

Related to this Question

Explore our homework questions and answers library