CMA Foundation · Fundamentals of Financial and Cost Accounting · Consignment
A consignor sends goods costing Rs 60,000 to a consignee and spends Rs 4,000 on packing and forwarding. The consignee spends Rs 2,000 on godown rent after receiving the goods. Sales realised are Rs 90,000, and the consignee's commission is 5% on sales. All goods are sold. What is the profit on consignment?
Profit on consignment is Rs 19,500. Sales of Rs 90,000 less goods Rs 60,000, packing Rs 4,000, godown rent Rs 2,000 and commission of Rs 4,500 at 5% gives Rs 70,500 in total charges, leaving Rs 19,500.
- ARs 19,500Correct
- BRs 21,500
- CRs 23,500
- DRs 18,000
Explanation
Commission = 5% of 90,000 = Rs 4,500. Total costs = 60,000 + 4,000 + 2,000 + 4,500 = Rs 70,500. Profit = 90,000 - 70,500 = Rs 19,500. Rs 23,500 omits commission, and Rs 21,500 omits the Rs 2,000 godown rent along with... not commission.
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