Question

X sends out 4000 boxes to Y costing 100 each. Consignor's expenses
10.000. 1/10th of boxes were lost in consignee's godown and treated as
normal loss. 2400 boxes were sold by consignee. The value of
consignment stock will be:

Answer 1

consignment stock = 136,666.667

Explanation:

When Normal Loss is given

then Valuation of Unsold Stock can be done by following way, otherwise Normal way is used

Let us talk about valuation of Unsold stock when Normal loss is given:

under this case calculate total cost of consignment by following way

whys we ascertain total cost of consignment ?

Because Normal loss is unavoidable, example 1000 litre oil in truck during transit 10 litre oil evaporate , value of 10 litre oil evaporate cannot be determined due to this Normal loss or Unit loss value will be inflate

and Valuation will be occur on remaining

Valuation of Unsold Stock

        4000 boxes@Rs 100 each =400000

Add: Direct Expenses of Consignor = 10000

               Total Cost of 4000 boxes = 410000

               Total Cost of 3600 boxes = 410000

               Total Cost of 1 boxes = $\frac{410000 }{3600}$

               Total Cost of 1200 boxes = $\frac{410000 }{3600}$ x 1200

                                                          = 136,666.667

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