P Consigned 1,00,000 lb. of oil costing `2 per lb at an invoice price ...
Commission Calculation:
Total Cost of Oil Consigned: 1,00,000 lb. x `2 = `2,00,000
Invoice Price: 1,00,000 lb. x `3 = `3,00,000
Total Sales: 90,000 lb. x `4 = `3,60,000
Total Expenses: `12,500
1. Calculation of Surplus Realized over Invoice Price (S.R):
S.R. = Total Sales - Invoice Price
S.R. = `3,60,000 - `3,00,000
S.R. = `60,000
2. Calculation of Commission on Total Sales:
Commission on Total Sales = 5% of Total Sales
Commission on Total Sales = 5/100 x `3,60,000
Commission on Total Sales = `18,000
3. Calculation of Commission on Surplus Realized:
Commission on Surplus Realized = 30% of Surplus Realized (S.R.)
Commission on Surplus Realized = 30/100 x `60,000
Commission on Surplus Realized = `18,000
Explanation:
1. Cost of Oil Consigned:
The cost of oil consigned is `2 per lb. and the total weight of oil consigned is 1,00,000 lb. Therefore, the total cost of oil consigned is `2 x 1,00,000 = `2,00,000.
2. Invoice Price:
The invoice price is `3 per lb. and the total weight of oil consigned is 1,00,000 lb. Therefore, the invoice price is `3 x 1,00,000 = `3,00,000.
3. Total Sales:
The total weight of oil sold is 90,000 lb. and the selling price per lb. is `4. Therefore, the total sales is 90,000 lb. x `4 = `3,60,000.
4. Total Expenses:
The total expenses incurred on advertisement and other recurring expenses is `12,500.
5. Surplus Realized over Invoice Price:
The surplus realized over the invoice price is the difference between the total sales and the invoice price. In this case, the surplus realized is `3,60,000 - `3,00,000 = `60,000.
6. Commission on Total Sales:
The commission on total sales is calculated as 5% of the total sales. In this case, the commission on total sales is 5/100 x `3,60,000 = `18,000.
7. Commission on Surplus Realized:
The commission on surplus realized is calculated as 30% of the surplus realized. In this case, the commission on surplus realized is 30/100 x `60,000 = `18,000.
Therefore, the total commission earned by T is `18,000 + `18,000 = `36,000.
P Consigned 1,00,000 lb. of oil costing `2 per lb at an invoice price ...
Commission Calculation for T
Given:
- Quantity of oil consigned = 1,00,000 lb.
- Cost of oil = `2 per lb.
- Invoice price = `3 per lb.
- Selling price of oil = `4 per lb.
- Quantity of oil sold = 90,000 lb.
- Advertisement and recurring expenses = `12,500.
Step 1: Calculation of Surplus/Shortage
- Total cost of consigned oil = Quantity consigned * Cost per lb
= 1,00,000 lb. * `2 per lb.
= `2,00,000
- Total sales value = Quantity sold * Selling price per lb
= 90,000 lb. * `4 per lb.
= `3,60,000
- Surplus/Shortage = Total sales value - Total cost of consigned oil
= `3,60,000 - `2,00,000
= `1,60,000
Step 2: Calculation of Commission
- Commission on total sales = 5% of Total sales value
= 5/100 * `3,60,000
= `18,000
- Commission on surplus = 30% of Surplus/Shortage
= 30/100 * `1,60,000
= `48,000
Step 3: Calculation of Total Commission
- Total commission = Commission on total sales + Commission on surplus
= `18,000 + `48,000
= `66,000
Commission Calculation Explanation:
1. Surplus/Shortage Calculation:
- The surplus/shortage is calculated by subtracting the total cost of the consigned oil from the total sales value.
- This gives us the surplus if the sales value is higher than the cost, or the shortage if the cost is higher than the sales value.
2. Commission Calculation:
- The commission is calculated based on the total sales value and the surplus/shortage.
- T is entitled to a commission of 5% on the total sales value and 30% of the surplus realized over the invoice price.
3. Total Commission Calculation:
- The total commission is the sum of the commission on total sales and the commission on surplus.
- This gives us the final commission amount that T is entitled to.
In this case, T would be entitled to a commission of `66,000.
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.