In chapter consignment

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sandeep (Querist)
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23 April 2009 x of kolkatta sends out goods costing 100000 to y of mumbai at cost+25%. consignor's expenses Rs 2000. 3/5th of the goods were sold by consignee at 85000.commission 2% on sales + 20% of gross sales less all commission exeeds invoice value. Amount of commission eill be
(A) Rs 3083
(B) Rs 3000
(C) Rs 2500
(D) Rs 2000

CA CS CIMA Prakash Somani

CA CS CIMA Prakash Somani (Expert)
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23 April 2009 The sale amount would be Rs 75000 which is sold at Rs 85000 by consignee.
So the profit would be Rs 10000.

Commission is 2% of sales (Rs 85000) i.e. Rs 1700 + (85000-75000)*20% i.e Rs 2000 so

the total commission would be Rs 3700 . it does not match woth answers given by you.

I am not clear about these lines:

20% of gross value..........invoice value.

sandeep

sandeep (Querist)
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23 April 2009

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Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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23 April 2009 Let the normal commission (2% of sales) be ‘ X’ as per problem and
special commission(20% of gross sales less all commission exeeds invoice value.) be Y
so total commission be (X + Y)

Normal commission = Gross sales * 2% i.e. 85000 * 2% = 1700_________(i)

Again special commission i,e, Y = 20% of gross sales less all commission exceeds invoice value.=
i.e. Y = 20%( gross sales- all commission – invoice value)
or, Y = 20% [75000 –[(X + Y)] – 60000]
or, Y = 20% [75000-1700-Y-60000] since X = 1700 as per (i) above
or, Y = 20% (8300 – Y)
or Y (100/20)= 8300- Y
therefore, Y= 1383

so normal commission ‘ X’is Rs. 1700 and
special commission Y is Rs. 1383
so total commission be (X + Y)= 1700 +1383 = 3083
Hence option is correct

Short cut method
[(85000* 2%)+ (85000-75000-1300)* 20/120]= 3083

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