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P Consigned 1,00,000 lb. of oil costing `2 per lb at an invoice price of `3. He spent Re. 0.25 per lb. asT sold 90,000 lb. at `4 per lb. He spent `12,500 on advertisement and other recurring expenses. T is entitled to a commission of 5% on total sales and 30% of surplus realised over I.P. Calculate commission?
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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.
Community Answer
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.
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P Consigned 1,00,000 lb. of oil costing `2 per lb at an invoice price of `3. He spent Re. 0.25 per lb. asT sold 90,000 lb. at `4 per lb. He spent `12,500 on advertisement and other recurring expenses. T is entitled to a commission of 5% on total sales and 30% of surplus realised over I.P. Calculate commission?
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P Consigned 1,00,000 lb. of oil costing `2 per lb at an invoice price of `3. He spent Re. 0.25 per lb. asT sold 90,000 lb. at `4 per lb. He spent `12,500 on advertisement and other recurring expenses. T is entitled to a commission of 5% on total sales and 30% of surplus realised over I.P. Calculate commission? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about P Consigned 1,00,000 lb. of oil costing `2 per lb at an invoice price of `3. He spent Re. 0.25 per lb. asT sold 90,000 lb. at `4 per lb. He spent `12,500 on advertisement and other recurring expenses. T is entitled to a commission of 5% on total sales and 30% of surplus realised over I.P. Calculate commission? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for P Consigned 1,00,000 lb. of oil costing `2 per lb at an invoice price of `3. He spent Re. 0.25 per lb. asT sold 90,000 lb. at `4 per lb. He spent `12,500 on advertisement and other recurring expenses. T is entitled to a commission of 5% on total sales and 30% of surplus realised over I.P. Calculate commission?.
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