Concept explainers
Concept:
Calculation of Inventory Costs in FOB Shipping:
When sales are made to a company,Determination of the ownership is dependent on the shipping terms associated with the goods in transit and is determined based on the following criteria:
If the sale is FOB Shipping Point, then the ownership of the goods is transferred to the buyer as soon as the goods which are sold, depart from the shipping point of the seller.
If the sale is FOB Destination, then the ownership of the goods is transferred to the buyer as soon as the goods which are sold, reach the shipping point of the buyer.
FOB stands for Freight on Board and includes all costs directly associated with the goods sold such as Cost, Insurance and Freight.
Inventory Costs to be assigned.

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