Question

Zonker Inc. purchases 500 units of an item at an invoice cost of \(30,000. What is the cost per unit? If the goods are shipped f.o.b. shipping point and the freight bill was\)1,500, what is the cost per unit if Zonker Inc. pays the freight charges? If these items were bought on 2/10, n/30terms and the invoice and the freight bill were paid within the 10-day period, what would be the cost per unit?

Short answer

Under the given cases, the cost per unit would be$60, $63, and $61.74, respectively.

Step-by-step solution

Cost per unit under the first case

$$\begin{gathered} \mathrm{Cost}\mathrm{per}\mathrm{unit}=\frac{\mathrm{Total}\mathrm{cost}}{\mathrm{Total}\mathrm{units}} \\ =\frac{\$31,000}{500} \\ =\$60 \end{gathered}$$

Cost per unit under the second case

$$\begin{gathered} \mathrm{Total}\mathrm{cost}=\mathrm{Cost}\mathrm{of}\mathrm{acquisition}+\mathrm{Freight}\mathrm{charges} \\ =\$30,000+\$1,500 \\ =\$31,500 \end{gathered}$$

$$\begin{gathered} \mathrm{Cost}\mathrm{per}\mathrm{unit}=\frac{\mathrm{Total}\mathrm{cost}}{\mathrm{Total}\mathrm{units}} \\ =\frac{\$31,500}{500} \\ =\$63 \end{gathered}$$

Cost per unit under the third case

$$\begin{gathered} \mathrm{Incurred}\mathrm{cost}=\mathrm{Total}\mathrm{cost}-\mathrm{Discount} \\ =\$31,500-\left(\$31500\times \frac{2}{100}\right) \\ =\$31,500-\$630 \\ =\$30,870 \end{gathered}$$

$$\begin{gathered} \mathrm{Cost}\mathrm{per}\mathrm{unit}=\frac{\mathrm{Incurred}\mathrm{cost}}{\mathrm{Total}\mathrm{Units}} \\ =\frac{\$30,870}{500} \\ =\$61.74 \end{gathered}$$