Question

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.

Answer 1

Inventory in consignee: $ 22,005

Consignor profit: $ 6,810.6

Step-by-step 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