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Difficulty: EasyAccounting for Dependent Branches at Selling / Invoice Price

A head office transferred goods costing ₦80,000 to its dependent branch at an invoice price calculated using a mark-up of 25% on cost. What is the total invoice price of the goods sent to the branch?

  1. A
    ₦20,000
  2. B
    ₦64,000
  3. ₦100,000Answer
  4. D
    ₦60,000

Answer

The total invoice price of the goods sent to the branch is ₦100,000.
To find the invoice price when goods are billed at cost plus a percentage mark-up, compute the profit element by taking 25% of the cost (25% of ₦80,000 = ₦20,000) and add it to the cost price (₦80,000 + ₦20,000 = ₦100,000).

Step-by-Step Solution

1
Calculate the mark-up amount in Naira.
Mark-up = 25% of ₦80,000 = 0.25 × ₦80,000 = ₦20,000
Mark-up is the profit percentage added directly to the cost price.
2
Add the mark-up amount to the original cost price to find the invoice price.
Invoice Price = Cost Price + Mark-up = ₦80,000 + ₦20,000 = ₦100,000
The invoice price reflects the selling value billed to the branch.

Key Concept

Invoice Price Calculation for Goods Sent to Branch
Estimated Time:45s
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Topics

Accounting for Dependent Branches at Selling / Invoice Price

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