Answer:
d. A tax of $18,000
Explanation:
If the price is higher than $525,000 which is his reservation price, the buyer will not buy the good
(1+t) > $525,000 / $510,000
1+t > 1.03
t > 0.03
t > 3%
3% of $510,000 = $15,300. So if the tax is greater than $15,300, the buyer will not buy the good
. Hence, the answer is option (D) A tax of $18,000 as this tax is higher than $15,300 while other option are less than $15,300
Answer:
$834,000+$41,500 = $875,500
Explanation:
Generally, F.O.B. terms determines which party would include stock in transit in inventory. Goods in transit in any case always belongs to the party holding legal ownership. When the goods in transit are sold F.O.B. destination, they belong to the purchaser only when they arrive at their final destination. When the goods in transit are sold F.O.B. shipping point, they belong to the purchaser once they shipped by the seller.
Applying the above to the scenario, the $94000 of goods purchased were in transit that were shipped f.o.b. destination, will not be included in inventory but the goods sold $41500 worth of inventory f.o.b. destination that did not reach the destination yet, will have to be included.
Therefore Inventory figure should be the $834,000 in stock plus the $41,500 sold goods in transit, on the terms of f.o.b destination.
