Question

A solar panel dealer acquires a used panel for $9,000, with terms FOB shipping point. Compute total inventory costs assigned to the used panel if additional costs include:_______.∙ $1,500 for sales staff salaries. ∙ $135 for shipping insurance.∙ $280 for transportation-in by train. ∙ $550 for used panel restoration.∙ $110 for online advertising. ∙ $300 for lawn care.

Answer 1

Answer: $‭9,965‬

Explanation:

FOB Shipping point is a shipping condition that means that the buyer takes over the ownership and control of the inventory as soon as the seller ships it. Everything afterwards is therefore the responsibility of the buyer.

As the following costs come after shipping, they will be included in the acquisition cost;

= Acquisition cost + shipping insurance + transportation-in by train + used panel restoration

= 9,000 + 135 + 280 + 550

= $‭9,965‬

Sales staff salaries, online advertising and lawn care are not related to the inventory.