CMA Foundation · Fundamentals of Financial and Cost Accounting · Consignment
Gopal Traders sends goods costing ₹80,000 to its agent in Jaipur on consignment, invoiced at cost plus 25%. What is the loading (excess of invoice price over cost) on these goods?
The loading is ₹20,000. The goods are invoiced at 125% of cost, so invoice price is ₹1,00,000 and the excess over the ₹80,000 cost is the loading. Applying 25% to the invoice price instead of to cost would wrongly give ₹25,000.
- A₹16,000
- B₹20,000Correct
- C₹25,000
- D₹1,00,000
Explanation
Invoice price = 80,000 × 125/100 = ₹1,00,000. Loading = 1,00,000 − 80,000 = ₹20,000. Taking 25% of the invoice price gives ₹25,000, which is wrong because the markup is on cost. ₹16,000 wrongly uses 20% of cost.
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