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9 October, 01:54

Spencer Company consigned 88 freezers, costing $490 each, to Remmers Company.

The cost of shipping the freezers amounted to $890 and was paid by Spencer Company.

On December 30, 2015, a report was received from the consignee, indicating that 44 freezers had been sold for $710 each.

Remittance was made by the consignee for the amount due, after deducting a commission of 6%, advertising of $240, and total installation costs of $310 on the freezers sold.

(a) Compute the inventory value of units unsold in the hands of the consignee.

(b) Compute the profit for the consignor for the units sold.

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  1. 9 October, 02:10
    0
    Inventory in consignee: $ 22,005

    Consignor profit: $ 6,810.6

    Explanation:

    We must remember that the goods cost is the sum of all it was needed to get the inventory ready for sell:

    consigned goods: 88 x 490 = 43,120

    shipping cost 890

    Total Cost for Spencer 44,010

    44,010 / 88 freezers x 44 freezers at hand: 22,005

    profit on the consignor:

    sales revenue 44 x 710 = 31,240

    commission 6% (1,874.4)

    cost of good sold

    44,010 / 88 x 44 freezers sold: (22,005)

    advertising (240)

    installation cost (310)

    Profit 6,810.6
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