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unit-12-consignment-accounts-iii

Unit-12 Consignment Accounts-III

Learn how Consignment Account is prepared when the goods are consigned at invoice price and how the necessary adjustments are made.

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What is loading? How do you compute it? Give examples.

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Learning Pundits Content Team

Written on Apr 24, 2019 12:45:18 PM

You know that the invoice price is obtained by adding a certain amount of profit to the cost price. The amount of profit which is added to the cost in order to arrive at the invoice price is called loading. In other words, loading is the difference between the invoice price and the cost price

Loading = IP - CP

For example, if the invoice price is Rs. 10000 and the cost price is Rs. 7500, the amount of loading will be

Loading = IP - CP or Number of units x (IP per unit - CP per unit)
= 10000 - 7500
= Rs. 2500

If the invoice price or the cost price is given and the profit (loading) is given in the form of a percentage either on IP or CP, the loading can be worked out directly in the same manner as we worked out the IP or CP.