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The price of a product excluding shipment is $7.25 Shipment cost from Omaha to B is $2 75 and Omaha to A is $5.15. Calculate the phantom cost far customers at B and freight absorption cost far seller to ship at A using the following figure. The price listed in the following figure is the actual selling price charged to customers.
Expert Answer
Phantom cost is the price above the actual cost of transportation
For customer B = Selling price – cost price – freight = 11.95-7.25-2.75 = $1.95 is the phantom cost
Absorption cost for A = Cost price +freight – selling price = 10 + 5.15 – 11.95 =3.2
