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What is the inventory cost

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Reference no: EM132882859

Problem - Purchase Discounts - 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?

2. Explain whether your answer to Requirement 1 would change if the discount were not taken.

3. Explain the arguments for and against the use of the net price method.

Reference no: EM132882859

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