Question

# ______ On August 5, 2021, Famous Furniture shipped 20 dining sets on consignment to Furniture Outlet,...

______ On August 5, 2021, Famous Furniture shipped 20 dining sets on consignment to Furniture Outlet, Inc. The cost of each dining set was \$350 each. The cost of shipping the dining sets amounted to \$1,800 and was paid for by Famous Furniture. On December 30, 2021, the consignee reported the sale of 15 dining sets at \$850 each. The consignee remitted payment for the amount due after deducting a 6% commission, advertising expense of \$300, and installation and setup costs of \$390. The total profit on units sold for the consignor is

a.   \$11,295

b.   \$4,695

c.   \$6,045

d.   \$9,945

Number of units consigned = 20
Cost per unit = \$350
Shipping charges = \$1,800
Total cost of units consigned = Number of units consigned x Cost per unit + Shipping charges
= 20 x 350 + 1,800
= 7,000 + 1,800
= \$8,800
Number of units sold by consignee = 15
Cost of goods sold by consignee = Total cost of units consigned x Number of units sold by consignee/Number of units consigned
= 8,800 x 15/20
= \$6,600
Inventory value of the units unsold = Total cost of units consigned - Cost of goods sold by consignee
= 8,800 – 6,600
= \$2,200

 Sales revenue (15 x 850) 12,750 Cost of goods sold -6,600 Consignee's commission (12,750 x 6%) -765 Advertising -300 Installation cost -390 Profit \$4,695

The total profit on units sold for the consignor is \$4,695.

Correct option is b.

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