furnace purchase Frank

Price: $5 USD

Question description

  1. Frank Dobbins (a homeowner) orders a furnace from ALPINE on Order #1.  The customer pays $1,000 - this is the retail price of the furnace.  The customer does not pay tax because they are out of state.  The product is advertised with "free shipping."  ALPINE has 3 of these furnaces in inventory with an average cost of $500 each.  A freight carrier (Carrier A) picks up the furnace from ALPINE's warehouse and signs for the shipment confirming that the product is in good condition. The freight carrier delivers the furnace to the customer.   The freight carrier charges $100 to deliver the furnace to the customer.  

Question 1A)  What expenses has Alpine accrued on this order (direct costs only)?  

Question 1B)  What is the gross profit? 

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