On March 10, Frazier Company received merchandise for resale from its normal supplier. The invoice price was $3,600 with terms of 2/10, n/30 for 100 units of Part #345. The invoice was paid on March 17. Freight costs were $120 and the company paid $108 of interest on a loan to buy the inventory. What is the unit cost that should be recorded for each of the 100 units of Part #345?

Question

Quizplus · Accepted Answer

The unit cost includes the invoice price minus the discount, plus freight costs. The discount is 2% of $3,600, which is $72. So, the net invoice price is $3,528. Adding the freight cost of $120 gives a total cost of $3,648. Dividing this by 100 units results in a unit cost of $36.48. The interest on the loan is not included in the inventory cost.

On March 10, Frazier Company Received Merchandise for Resale from Its