Avanti Purchases Inventory from Overseas and Incurs the Following Costs

Multiple Choice

Avanti purchases inventory from overseas and incurs the following costs: the merchandise cost is $50,000, credit terms 2/10, n/30 that apply only to the $50,000; FOB shipping point freight charges are $1,500; insurance during transit is $500; and import duties are $1,000. Avanti paid within the discount period and incurred additional costs of $1,200 for advertising and $5,000 for sales commissions. Compute the cost that should be assigned to the inventory.

A) $50,000
B) $51,500
C) $52,000
D) $53,000
E) $53,200