When the goods are sent by the head office to the branch at invoice price i.e., cost plus some percentage of profit, the branch manager is required to sell the goods at invoice price only. Goods are marked on invoice price to achieve the following objectives:

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(i)            In order to keep secret from the branch manager the cost price of the goods and profit made, so that the branch manager many not start a rival and competitive business with the concern; and

(ii)            In order to have effective control on stock i.e, stock at any time must be equal to opening stock plus goods received from head office minus sales made at the branch.

 

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