Auge Company annually purchases 1,000 tons of raw material at a cost of $100,000 with terms of 2/10, n/30. Auge uses the net price method to account for purchase discounts. Freight costs amount to $10,000 and storage and handling costs to $7,500. Required: 1. What is the inventory cost?

Auge Company annually purchases 1,000 tons of raw material at a cost of $100,000 with terms of 2/10, n/30. Auge uses the net price method to account for purchase discounts. Freight costs amount to $10,000 and storage and handling costs to $7,500. Required: 1. What is the inventory cost?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 4C

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Question

Auge Company annually purchases 1,000 tons of raw material at a cost of $100,000 with
terms of 2/10, n/30. Auge uses the net price method to account for purchase discounts.
Freight costs amount to $10,000 and storage and handling costs to $7,500.
Required:
1. What is the inventory cost?

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