Max Chemical Works consigned 700 boxes of medicines to Raja Medical St...
Calculation of Cost Price
- Consignment of 700 boxes of medicines was sold for Rs. 168,000 which was 20% above the actual cost price.
- Therefore, the actual cost price of 700 boxes of medicines = 168000/1.20 = Rs. 140,000
Calculation of Expenses
- Insurance and freight paid by Max Chemical Works = Rs. 14,000
- Loss of 50 boxes during transit and the transporter paid Rs. 22,000 for the loss
- Carriage incurred by the Consignee for the remaining boxes = Rs. 9,750
- Selling expenses incurred by the Consignee = Rs. 6,000
Calculation of Sales
- Out of the 700 boxes, only 650 boxes were received by the Consignee (700-50).
- The Consignee sold 500 boxes for Rs. 160,000.
- Therefore, the selling price of one box = 160000/500 = Rs. 320
Calculation of Commission
- The Consignee is entitled to a commission of 6% on gross sales.
- Therefore, commission earned by the Consignee = 6% of Rs. 160,000 = Rs. 9,600
Calculation of Profit or Loss
- Total expenses incurred = Rs. 14,000 + Rs. 22,000 + Rs. 9,750 + Rs. 6,000 = Rs. 51,750
- Total sales = Rs. 160,000
- Total commission earned = Rs. 9,600
- Total cost price = Rs. 140,000
- Therefore, profit or loss = Total sales - (Total expenses + Total commission + Total cost price)
- = Rs. 160,000 - (Rs. 51,750 + Rs. 9,600 + Rs. 140,000)
- = Rs. -41,350 (Loss)
Conclusion
Max Chemical Works incurred a loss of Rs. 41,350 in this consignment.
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