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The Petunia Corporation grows and consigns flowering plants to retailers. The consignee receives a sales commission of 20%. Also, he is paid to water and care for the plants in his possession. Dead plants are discarded but cannot exceed 15% of the plants shipped or the consignee must pay the cost price for them. Freight charges are to be borne by the consignor. Each plant costs $0.25 to grow and prepare for shipment and is to be sold for $1.00. The consignee must bear sales costs such as clerks’ salary, light, rent and depreciation of display counters. The consignee is a Del credere agent. Throughout 1996, Petunia Corporation shipped a total of 2,000 plants to Gigantic Department store. Of these, 1,500 were sold and 60 were discarded. Freight cost $200 and was paid by Gigantic. Clerks’ salaries, rent, light and depreciation was $125. Watering cost $110. One-third of the sales were on credit, of which $200 is still outstanding and $10 had been written off as uncollectible. Both companies record consignments separately from other transactions. 1. What is the profit on consignments for the consignee? Computation of consignment profit: Consignment sales (1500 X $1) Cost of units sold (1500 X $0.25) Freight (200) Clerk’s salaries Watering costs Commission charged by consignee (20% X $1,500) Profit on consignment sales 2. What is the profit on consignments sales for the consignor? Computation of consignment profit: Consignment sales (1500 X $1) Cost of units sold (1500 X $0.25) Commission charged by consignee (20% X $1,500) Profit on sales for the consignor $1,500 (375) (125) (110) (300) $ 390 $1,500 (375) (300) $825