CMA Foundation · Fundamentals of Financial and Cost Accounting · Consignment
Mehta Traders consigns goods to Rao & Co. The consignee is entitled to an ordinary commission of 5% on gross sales. Credit sales on the consignment were ₹2,00,000 and cash sales ₹1,00,000. How much commission is Rao & Co. entitled to?
The commission is ₹15,000. Ordinary commission is earned on total sales, whether cash or credit, so 5% of ₹3,00,000 gives ₹15,000. Calculating it only on credit sales would give ₹10,000, which ignores the cash sales.
- A₹10,000
- B₹5,000
- C₹15,000Correct
- D₹12,500
Explanation
Ordinary commission is calculated on total sales, both cash and credit. Total sales = 2,00,000 + 1,00,000 = ₹3,00,000. Commission = 5% x 3,00,000 = ₹15,000. Option ₹10,000 wrongly takes only credit sales.
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