In each separate situation, identify which company must pay the freight. 1. Company A purchased merchandise from Company X, FOB destination, for $10,000. 2. Company B purchased merchandise from Company Y, FOB shipping point, for $10,000.

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Answer 1

Textbook Question

Chapter 5, Problem 1YT

In each separate situation, identify which company must pay the freight.

1. Company A purchased merchandise from Company X, FOB destination, for $10,000.
2. Company B purchased merchandise from Company Y, FOB shipping point, for $10,000.

Expert Solution & Answer

To determine

Identify the company that must pay the freight.

Explanation of Solution

FOB Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse.

FOB Destination means that the buyer pays all costs incurred for the delivery of goods once the goods is delivered at buyer receiving point.

Identify the company that must pay the freight:

1. Under FOB destination, the buyer does not pay shipment charges whereas the vendor pays the shipping cost. In this case, Company X is the vendor hence Company X needs to pay the freight charges.
2. Under FOB shipping point, the buyer pays the shipment charges whereas the vendor does not pays the shipping cost. In this case, Company B is the buyer hence Company B needs to pay the freight charges.

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William Manufacturing produces a product that sells for $60.00. Fixed costs are $310,000, and variable costs are $30.00 per unit. William can buy a new production machine that will increase fixed costs by $16,500 per year but will decrease variable costs by $5.00 per unit. Compute the contribution margin per unit if the machine is purchased. a) $31.00 b) $32.00 c) $34.00 d) $35.00 e) $30.00.

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Answer 2

Textbook Question

Chapter 5, Problem 1YT

In each separate situation, identify which company must pay the freight.

1. Company A purchased merchandise from Company X, FOB destination, for $10,000.
2. Company B purchased merchandise from Company Y, FOB shipping point, for $10,000.

Expert Solution & Answer

To determine

Identify the company that must pay the freight.

Explanation of Solution

FOB Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse.

FOB Destination means that the buyer pays all costs incurred for the delivery of goods once the goods is delivered at buyer receiving point.

Identify the company that must pay the freight:

1. Under FOB destination, the buyer does not pay shipment charges whereas the vendor pays the shipping cost. In this case, Company X is the vendor hence Company X needs to pay the freight charges.
2. Under FOB shipping point, the buyer pays the shipment charges whereas the vendor does not pays the shipping cost. In this case, Company B is the buyer hence Company B needs to pay the freight charges.

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Answer 3

Textbook Question

Chapter 5, Problem 1YT

In each separate situation, identify which company must pay the freight.

1. Company A purchased merchandise from Company X, FOB destination, for $10,000.
2. Company B purchased merchandise from Company Y, FOB shipping point, for $10,000.

Expert Solution & Answer

To determine

Identify the company that must pay the freight.

Explanation of Solution

FOB Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse.

FOB Destination means that the buyer pays all costs incurred for the delivery of goods once the goods is delivered at buyer receiving point.

Identify the company that must pay the freight:

1. Under FOB destination, the buyer does not pay shipment charges whereas the vendor pays the shipping cost. In this case, Company X is the vendor hence Company X needs to pay the freight charges.
2. Under FOB shipping point, the buyer pays the shipment charges whereas the vendor does not pays the shipping cost. In this case, Company B is the buyer hence Company B needs to pay the freight charges.

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Answer 4

Textbook Question

Chapter 5, Problem 1YT

In each separate situation, identify which company must pay the freight.

1. Company A purchased merchandise from Company X, FOB destination, for $10,000.
2. Company B purchased merchandise from Company Y, FOB shipping point, for $10,000.

Expert Solution & Answer

To determine

Identify the company that must pay the freight.

Explanation of Solution

FOB Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse.

FOB Destination means that the buyer pays all costs incurred for the delivery of goods once the goods is delivered at buyer receiving point.

Identify the company that must pay the freight:

1. Under FOB destination, the buyer does not pay shipment charges whereas the vendor pays the shipping cost. In this case, Company X is the vendor hence Company X needs to pay the freight charges.
2. Under FOB shipping point, the buyer pays the shipment charges whereas the vendor does not pays the shipping cost. In this case, Company B is the buyer hence Company B needs to pay the freight charges.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Identify the company that must pay the freight.

Explanation of Solution

FOB Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse.

FOB Destination means that the buyer pays all costs incurred for the delivery of goods once the goods is delivered at buyer receiving point.

Identify the company that must pay the freight:

1. Under FOB destination, the buyer does not pay shipment charges whereas the vendor pays the shipping cost. In this case, Company X is the vendor hence Company X needs to pay the freight charges.
2. Under FOB shipping point, the buyer pays the shipment charges whereas the vendor does not pays the shipping cost. In this case, Company B is the buyer hence Company B needs to pay the freight charges.

Answer 8

Expert Solution & Answer

To determine

Identify the company that must pay the freight.

Explanation of Solution

FOB Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse.

FOB Destination means that the buyer pays all costs incurred for the delivery of goods once the goods is delivered at buyer receiving point.

Identify the company that must pay the freight:

1. Under FOB destination, the buyer does not pay shipment charges whereas the vendor pays the shipping cost. In this case, Company X is the vendor hence Company X needs to pay the freight charges.
2. Under FOB shipping point, the buyer pays the shipment charges whereas the vendor does not pays the shipping cost. In this case, Company B is the buyer hence Company B needs to pay the freight charges.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Identify the company that must pay the freight.

Answer 12

Explanation of Solution

FOB Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse.

FOB Destination means that the buyer pays all costs incurred for the delivery of goods once the goods is delivered at buyer receiving point.

Identify the company that must pay the freight:

1. Under FOB destination, the buyer does not pay shipment charges whereas the vendor pays the shipping cost. In this case, Company X is the vendor hence Company X needs to pay the freight charges.
2. Under FOB shipping point, the buyer pays the shipment charges whereas the vendor does not pays the shipping cost. In this case, Company B is the buyer hence Company B needs to pay the freight charges.

Answer 13

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In each separate situation, identify which company must pay the freight. 1. Company A purchased merchandise from Company X, FOB destination, for $10,000. 2. Company B purchased merchandise from Company Y, FOB shipping point, for $10,000.

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