Le Sserafim Industries sells merchandise to dealers on a consignment basis. Shipping costs are chargeable to Le Sserafim, although in some cases, the dealer pays them, while advertising costs are reimbursable from the consignor. The selling price of the merchandise averages 40% above cost of merchandise, exclusive of freight. The dealer is paid a 10% commission on the sales price for all sales made. All dealer sales are made on cash basis. The following consignment sales activities occurred during the current year. Units shipped 100 Unit cost P10,000 Freight cost incurred: Paid by Le Sserafim 75,000 Paid by consignee 25,000 Advertising costs paid by consignee 50,000 At the end of the month, the consignor receives a notification from the consignee that 80 units were sold and that the amount due to consignor is enclosed.

Le Sserafim Industries sells merchandise to dealers on a consignment basis. Shipping costs are chargeable to Le Sserafim, although in some cases, the dealer pays them, while advertising costs are reimbursable from the consignor. The selling price of the merchandise averages 40% above cost of merchandise, exclusive of freight. The dealer is paid a 10% commission on the sales price for all sales made. All dealer sales are made on cash basis. The following consignment sales activities occurred during the current year. Units shipped 100 Unit cost P10,000 Freight cost incurred: Paid by Le Sserafim 75,000 Paid by consignee 25,000 Advertising costs paid by consignee 50,000 At the end of the month, the consignor receives a notification from the consignee that 80 units were sold and that the amount due to consignor is enclosed.

Name: 1. How much is the value of inventory in the hands of consignee?2. How
Uploaded: 2024-03-20T06:32:37.000Z
Channel: Bartleby
Description: 1. How much is the value of inventory in the hands of consignee?2. How much is the net Income to be reported by Le Sserafim?3. How much is the amount remitted by the dealer to Le Sserafim? Le Sserafim Industries sells merchandise to dealers on a cons

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 14E: Many different businesses employ markup on cost to arrive at a price. For each of the following...

See similar textbooks

Similar questions

Many different businesses employ markup on cost to arrive at a price. For each of the following situations, explain what the markup covers and why it is the amount that it is. a. Department stores have a markup of 100 percent of purchase cost. b. Jewelry stores charge anywhere from 100 percent to 300 percent of the cost of the jewelry. (The 300 percent markup is referred to as keystone.) c. Johnson Construction Company charges 12 percent on direct materials, direct labor, and subcontracting costs. d. Hamilton Auto Repair charges customers for direct materials and direct labor. Customers are charged 45 per direct labor hour worked on their job; however, the employees actually cost Hamilton 15 per hour.
Vernon Industries sells merchandise to dealers on a consignment basis. Shipping costs are chargeable toVernon, although in some cases, the dealer pays them, while advertising costs are reimbursable from theconsignor. The selling price of the merchandise averages 40% above cost of merchandise, exclusive offreight. The dealer is paid a 10% commission on the sales price for all sales made. All dealer sales are madeon cash basis. The following consignment sales activities occurred during the current year.Units shipped 100Unit cost P10,000Freight cost incurred:Paid by Vernon 75,000Paid by consignee 25,000Advertising costs paid by consignee 50,000At the end of the month, the consignor receives a notification from the consignee that 80 units were sold andthat the amount due to consigner is enclosed. REQUIRED:3. Value of inventory in the hands of the consignee ____________4. Net income to be reported by the consignor ____________5. Amount remitted to the consignor
Hayao Co. purchases inventory from overseas and incurs the following costs: the cost of the merchandise is $50,000 with the credit terms of 2/10, n/30; FOB shipping point freight charges are $1,500; insurance during transit is $500; and import duties are $1,000. Hayao paid within the discount period and incurred additional costs of $1,200 for advertising, $5,000 for sales commissions and $500 for delivery of goods to the customers. Compute the cost that should be assigned to the inventory.
Fahey Company sells Stairmasters to a retailer, Physical Fitness, Inc., for $2,000,000. Fahey has a history of providing price concessions on this product if the retailer has difficulty selling the Stairmasters to customers. Fahey has experience with sales like these in the past and estimates that the maximum amount of price concessions is $300,000. Instructions a. Determine the amount of revenue that Fahey should recognize for the sale of Stairmasters to Physical Fitness, Inc. b. According to GAAP, in some situations, the amount of revenue recognized may be constrained. Explain how the accounting for the Stairmasters sales might be affected by the revenue constraint due to variable consideration or returns. c. Some believe that revenue recognition should be constrained by collectibility. Is such a view consistent with GAAP? Explain.
Mogul Company ships merchandise to Ski Outfit in a consignment arrangement. The arrangement specifies that Ski Outfit will attempt to sell the merchandise, and in return, Mogul will pay to Ski Outfit a 20% sales commission on any merchandise sold. During the year, Mogul ships inventory with a cost of $95,000 to Ski Outfit. By the end of the year, $72,000 of the merchandise has been sold to customers for a total of $100,600. What amount of inventory will Mogul report at year end?
Coronado Company sells Stairmasters to a retailer, Physical Fitness, Inc., for $1,828,000. Coronado has a history of providing price concessions on this product if the retailer has difficulty selling the Stairmasters to customers. Coronado has experience with sales like these in the past and estimates that the maximum amount of price concessions is $295,000.(a) Determine the amount of revenue that Coronado should recognize for the sale of Stairmasters to Physical Fitness, Inc. Revenue (gross method) = ? Revenue (net method) = ?
Lapu-lapu Company sold merchandise on a consignment basis to dealers. The gross profit was 25% above cost. The dealer is paid a 10% commission of the sales price for all sales made. All dealer sales are made on a cash basis. The following consignment activities occurred during the current year Manufacturing cost of goods shipped on consignment 8,800,000 Sales price of merchandise sold by dealers 9,600,000 Payments remitted by dealers after deducting commission 6,300,000 19. What was the gross profit on consignment sales? 1,920,000 c. 1,700,000 1,220,000 d. 2,400,000
Philacor, Inc. consigned twelve refrigerators to Ocampo’s Emporium. The refrigerators cost P6,000 each and the consignor paid P720 for freight-out. The consignee rendered an account sales for the five units sold at P7,700 each, and deducted the following items from the selling price: Commission (based on sales net of commission) 10% Marketing expense (based on commission) 10% Delivery and installation (on each unit sold) P30 How much was the net profit of the consignor on the five refrigerators sold? How much was the net remittance of the consignee on the five refrigerators sold?
Zonker NV purchases 500 units of an item at an invoice cost of €30,000. What is the cost per unit? If the goods are shipped f.o.b. shipping point and the freight bill was €1,500, what is the cost per unit if Zonker pays the freight charges? If these items were bought on 2/10, n/30 terms and the invoice and the freight bill were paid within the 10-day period, what would be the cost per unit?
(Discounts) Fahey Company sells Stairmasters to a retailer, Physical Fitness, Inc., for $2,000,000. Fahey has a history of providing price concessions on this product if the retailer has difficulty selling the Stairmasters to customers. Fahey has experience with sales like these in the past and estimates that the maximum amount of price concessions is $300,000.Instructions(a) Determine the amount of revenue that Fahey should recognize for the sale of Stairmasters to Physical Fitness, Inc.(b) According to GAAP, in some situations, the amount of revenue recognized may be constrained. Explain how the accounting for the Stairmasters sales might be affected by the revenue constraint due to variable consideration or returns.(c) Some believe that revenue recognition should be constrained by collectibility. Is such a view consistent with GAAP? Explain.
Zonker Inc. purchases 500 units of an item at an invoicecost of $30,000. What is the cost per unit? If the goods areshipped f.o.b. shipping point and the freight bill was$1,500, what is the cost per unit if Zonker Inc. pays thefreight charges? If these items were bought on 2/10, n/30terms and the invoice and the freight bill were paid withinthe 10-day period, what would be the cost per unit?
Jasper Company is a wholesaler that buys merchandise in large quantities. Its supplier’s catalog indicates a list price of $500 per unit on merchandise Jasper intends to purchase, and offers a 30% trade discount for large quantity purchases. The cost of shipping for the merchandise is $7 per unit. Jasper’s total purchase price per unit will be: