Question

R sends goods costing Rs. $2,00,000$ to K. R's expenses Rs. $5,000$. K's expenses in relation to sales Rs. $2,000$. $80\%$ of the goods were sold at $20\%$ above cost. The profit on consignment will be ________.

• A. Rs. $26,000$
• B. Rs. $32,000$
• C. Rs. $26,200$
• D. Rs. $(6,000)$

Answer 1

The correct option is A Rs. $26,000$

Cost of goods = Rs. 2,00,000

Cost of goods sold =Rs. 2,00,000 x 80% =Rs. 1,60,000

Loading on goods sold = 20% above cost =Rs. 1,60,000 x 20%=Rs. 32,000

Profit on consignment = loading on goods sold - proportionate expenses incurred on goods sold = Rs.32,000 - (Rs.5,000 x 80%) - Rs.2,000 = Rs.26,000.

Note: R's expenses of Rs. 5,000 will be taken proportionately as he has incurred these expenses for 100% of the goods. However, K's expenses will not be taken proportionately as he has incurred these expenses particularly for this sale.