Walberg Associates, antique dealers, purchased goods for $39,300. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Walberg Associates's warehouse was $2,100. Walberg Associates insured the shipment at a cost of $330. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of $670. Determine the cost of inventory.

Cost of Inventory in terms of IAS 2 Include the Purchase Cost, Conversion Costs and Other costs directly incurred to put the Inventory in the location and condition intended by the company for sale.

It is Important to note that the purchase is made on a Free On Board shipping basis, which means that the risk and benefits on the inventory are transferred to seller once the inventory is loaded and Cost to deliver goods to Buyer are borne by the buyer.

Cost of the Inventory is thus Calculated as follows:

Purchases Cost $39,300

Add Transportation Cost $2,100

Add Cleaning and Refurbishment Costs $670

Total Inventory Cost $42,070

fichoh fichoh · Answer 2 · 2020-03-27T09:13:42+01:00

Answer: $42,400

Explanation:

Given the following ;

Cost of goods purchased= $39,300

Transport cost to warehouse = $2,100

Shipment Insurance = $330

Cleaning and refurbishment cost =$670

Cost of an inventory refers to the subtotal amount spent in getting the goods the point or location where the goods are being put up for sale.

The FOB shipping point means Free On-board Shipping, that is the cost of moving the goods to a central point, usually a designated spot within the country or state of the buyer is covered or bearded by the seller.

Therefore, cost of inventory =

Cost of goods + transport cost to warehouse + shipment insurance + cleaning and refurbishment cost =

$39,300 + $2,100 + $330 + $670 = $42,400