Invoice Price and LoadingSometimes, instead of sending the goods to the consignee at cost price, the consignor invoices them at a higher price, the object being not to disclose to the consignee, the amount of the consignorâ€™s profit. Such higher price is called as invoice price. In other words, Invoice price is the price mentioned in the Pro-forma invoice, which is higher than the cost price.
The difference between invoice price and cost price is called as loading.
It is now important for us to understand the various costs which are summarised as follows:
We shall now recall the 7th standard formula
Here, in consignment, consignor adds some loading element to the cost price and sends goods to consignee at the invoice price. This is done by the consignor to maintain secrecy about his profits. Consignee has to add some profit to the invoice price and make a final sale to the customer. Hence,