CMA Foundation · Fundamentals of Financial and Cost Accounting · Consignment
Ananya Traders consigned 200 units costing Rs 150 each to Bharat Agencies. Ananya paid freight of Rs 2,000 and insurance in transit of Rs 1,000. At the end of the period, 40 units remain unsold with the consignee. What is the value of closing stock on consignment (ignoring any consignee expenses)?
Closing stock is Rs 6,600. Total cost of Rs 30,000 plus freight and insurance of Rs 3,000 gives Rs 33,000 for 200 units, or Rs 165 per unit. Forty unsold units at Rs 165 equal Rs 6,600, since direct expenses are included in valuation.
- ARs 6,000
- BRs 6,600Correct
- CRs 6,300
- DRs 7,000
Explanation
Cost of goods = 200 x 150 = Rs 30,000. Add freight and insurance Rs 3,000 to get Rs 33,000, which is Rs 165 per unit. Closing stock = 40 x 165 = Rs 6,600. Rs 6,000 ignores the proportionate direct expenses.
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