CMA Foundation · Fundamentals of Financial and Cost Accounting · Consignment
Kavya Textiles consigned 400 units costing ₹150 per unit. It paid ₹8,000 as freight and insurance. The consignee paid ₹4,000 for unloading and octroi up to the godown, and ₹5,000 for selling expenses. At the end of the period 100 units are unsold. What is the value of the closing stock on consignment?
Closing stock is ₹18,000. Cost of ₹60,000, freight and insurance of ₹8,000 and godown-related expenses of ₹4,000 total ₹72,000 for 400 units, or ₹180 per unit. Selling expenses are excluded from stock valuation, so 100 unsold units are valued at ₹18,000.
- A₹15,000
- B₹17,000
- C₹18,000Correct
- D₹19,250
Explanation
Cost ₹60,000 + consignor's expenses ₹8,000 + consignee's expenses up to the godown ₹4,000 = ₹72,000. Per unit this is ₹72,000 ÷ 400 = ₹180, so 100 units are valued at ₹18,000. Selling expenses of ₹5,000 are excluded; including them gives ₹19,250, which is wrong.
Did you get it right without looking?
One question tells you little. A timed set on Consignment shows your real accuracy, how long you take and where you lose marks.
More Consignment questions
- A consignor sends goods costing ₹60,000 to a consignee and invoices them at cost plus 25%. What is the invoice price of the consignment, and…
- 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 god…
- Roy Enterprises consigns goods at cost plus 50%. Goods with an invoice price of ₹9,000 are lost abnormally in transit. At what amount should…
- Which of the following is an example of a normal loss on consignment that is NOT separately charged to the Consignment Account as a loss but…
- Which statement about an account sales is correct?
- Nair Brothers invoices goods to the consignee at ₹150 per unit against a cost of ₹120 per unit. 40 units are lost in transit through an abno…