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{"id":5993,"date":"2022-01-30T09:21:53","date_gmt":"2022-01-30T03:36:53","guid":{"rendered":"https:\/\/eponlinestudy.com\/?p=5993"},"modified":"2022-01-30T09:21:53","modified_gmt":"2022-01-30T03:36:53","slug":"process-costing-inter-process-profit-finished-stock-account-statement-of-actual-realized-profit-problems-and-solutions","status":"publish","type":"post","link":"https:\/\/eponlinestudy.com\/process-costing-inter-process-profit-finished-stock-account-statement-of-actual-realized-profit-problems-and-solutions\/","title":{"rendered":"Process Costing | Inter-Process Profit| Problem and Solution"},"content":{"rendered":"

\"\"<\/p>\n

 <\/p>\n

 <\/p>\n

\u00a0<\/span><\/b><\/p>\n

Process Costing <\/span><\/b><\/b><\/h2>\n

The cost accounting system used by process is called process costing. <\/span><\/p>\n

To prepare bread, we need mixing of white flour, ghee, sugar, eggs, baking powder etc.<\/span><\/p>\n

From this mixture, different size of bread can be prepared. <\/span><\/p>\n

These sized are baked in oven. <\/span><\/p>\n

Baked bread cut and packed. <\/span><\/p>\n

\u00a0<\/span><\/p>\n

Process costing is applied in the oil refinery, chemical, timber, textile, sugar mill and food processing industries. <\/span><\/p>\n

These companies set the right prices for their products and determine whether costs are tracking in line with forecasts. <\/span><\/p>\n

\u00a0<\/span><\/p>\n

A separate process account is prepared for each process. <\/span><\/p>\n

Materials, labour, overhead, machine expenses etc are debited in each process. <\/span><\/p>\n

Process costing helps to determine the cost of their products at each stage of the process of manufacturing. <\/span><\/p>\n

It helps to control costs, evaluate performance and check the products at each stage. <\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

Inter-Process Profit in Process Costing<\/span><\/b><\/b><\/h3>\n

The profit associated with the transfer of goods from one process to another process is called inter-process profit. <\/span><\/p>\n

Normally, finished goods are transferred to next process immediately at a cost basis. <\/span><\/p>\n

But some processes industries transfer next process by include some profit percentage. <\/span><\/p>\n

This incorporated profit is called inter- process profit. <\/span><\/p>\n

While transferring goods to next process, some profit is added. <\/span><\/p>\n

It is called transfer price or mark-up price. <\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
\n

Cost of closing stock<\/span><\/p>\n<\/td>\n

\n

= (Cost x Closing stock) \u00f7<\/span> Total cost<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Unrealized profit <\/span><\/p>\n<\/td>\n

\n

= Closing stock \u2013<\/span> Cost of closing stock <\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Gross profit (% on cost)<\/span><\/p>\n<\/td>\n

\n

= Total cost x<\/span> % \u00f7 100<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Transfer price <\/span><\/p>\n<\/td>\n

\n

= Total cost +<\/span> Gross profit<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Gross profit (% on sales)<\/span><\/p>\n<\/td>\n

\n

= Total cost x % \u00f7 (% \u2013 100)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [<\/span>\u2235<\/span> % on sales or transfer price]<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/i><\/b><\/span><\/p>\n

Objectives of Inter Process Profit<\/span><\/b><\/span><\/h3>\n

The main objectives of inter process profit are:<\/span><\/p>\n

To access (review, evaluate) profit of each process.<\/span><\/p>\n

To access (review, evaluate) performance of each process.<\/span><\/p>\n

To access (review, evaluate) whether product can compete with market product.<\/span><\/p>\n

It helps to take decision about make or buy.<\/span><\/p>\n

It helps to determine selling price of semi-finished goods.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Process I Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars<\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening stock<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

By Process II account<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct materials <\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Direct labour <\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Less: Closing stock<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Prime cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Production overhead<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total\/Process cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Gross profit<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Transfer price<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/b><\/p>\n

Gross profit (% on sales or transfer price) =<\/span> Total cost x<\/span> % \u00f7 (100 \u2013 %) <\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Process II Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars<\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening stock<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

By Process III account<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Process I<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct materials <\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Direct Labour <\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Less: Closing stock<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Prime cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Production overhead<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total\/Process cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Gross profit<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Transfer price<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/b><\/p>\n

Cost of closing stock = (Cost x Closing stock) \u00f7 Total cost<\/span><\/p>\n

Unrealized profit\u00a0\u00a0 = Closing stock \u2013 Cost of closing stock <\/span><\/p>\n

Gross profit (% on sales or transfer price) =<\/span> Total cost x<\/span> % \u00f7 (100 \u2013 %) <\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Process III Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars<\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening stock<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

By Finished goods account <\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Process II<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct materials <\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Direct labour <\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Less: Closing stock<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Prime cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Production overhead<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total\/Process cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Gross profit<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Transfer price<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

Cost of closing stock \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = (Cost x Closing stock) \u00f7 Total cost<\/span><\/p>\n

Unrealized profit\u00a0\u00a0 = Closing stock \u2013 Cost of closing stock <\/span><\/p>\n

Gross profit (% on sales or transfer price) =<\/span> Total cost x<\/span> % \u00f7 (100 \u2013 %) <\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Finished Stock Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening stock<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

By Sales\u00a0 account <\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Process III\u00a0 account <\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Less: Closing stock<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total\/Process cost<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Profit <\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Sales <\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n

\n

xxxx<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

Cost of closing stock \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 = (Cost x Closing stock) \u00f7 Total cost<\/span><\/p>\n

Unrealized profit = Closing stock \u2013 Cost of closing stock <\/i><\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Statement of Actual Realized Profit<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

Sources <\/span><\/p>\n<\/td>\n

\n

Process<\/span><\/p>\n<\/td>\n

\n

Unrealized Profit<\/span><\/p>\n<\/td>\n

\n

Actual Profit<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Opening<\/span><\/p>\n<\/td>\n

\n

Closing<\/span><\/p>\n<\/td>\n

\n

Difference \u00b1<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

1<\/span><\/i><\/p>\n<\/td>\n

\n

2<\/span><\/i><\/p>\n<\/td>\n

\n

3<\/span><\/i><\/p>\n<\/td>\n

\n

4<\/span><\/i><\/p>\n<\/td>\n

\n

5 = 3 \u2013 4<\/span><\/i><\/p>\n<\/td>\n

\n

6 = 2 + 5<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

Process I<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Process II<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Process III<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Finished Stock<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/b><\/p>\n

\u00a0<\/span><\/b><\/p>\n

\u00a0<\/span><\/b><\/p>\n

###########<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Click on the link for <\/span>YouTube<\/span><\/b> videos<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Accounting Equation<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/c89jkz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Journal Entries in Nepali<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/uaakkz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Journal Entries<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/8aakkz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Journal Entry and Ledger<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/caakkz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Ledger<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/haakkz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Subsidiary Book<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/399jkz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Cashbook<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/889jkz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Trial Balance and Adjusted Trial Balance<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/c59jkz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Bank Reconciliation Statement (BRS)<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/q59jkz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Depreciation<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/ugakkz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Click on the link for <\/span>YouTube<\/span> videos chapter wise\u00a0 <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Financial Accounting and Analysis (All videos)<\/span><\/p>\n<\/td>\n

\n

h<\/span><\/a><\/span>ttp:\/\/tiny.cc\/jlersz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Accounting Process<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/mlersz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Accounting for Long Lived Assets<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/plersz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Analysis of Financial Statement<\/span><\/p>\n<\/td>\n

\n

http:\/\/tiny.cc\/slersz<\/span><\/a><\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

###########<\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

 <\/p>\n

\u00a0<\/span><\/b><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 4A<\/span><\/b><\/p>\n

EP Agro Industry, a small handmade industry for agriculture product has provided you following are the details in respect of two processes, A and B:<\/b><\/span><\/p>\n\n\n\n\n\n\n\n\n
\n

Details <\/span><\/p>\n<\/td>\n

\n

Process A<\/span><\/p>\n<\/td>\n

\n

Process\u00a0 B<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Materials<\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Direct wages <\/span><\/p>\n<\/td>\n

\n

24,000<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Direct overheads<\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Closing Stock (valued at total cost)<\/span><\/p>\n<\/td>\n

\n

8,000<\/span><\/p>\n<\/td>\n

\n

16,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Profit % on transfer price<\/span><\/p>\n<\/td>\n

\n

20%<\/span><\/p>\n<\/td>\n

\n

20%<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Additional information:<\/span><\/p>\n

(a) Out of the output transferred to finished stock costing $20,000 remained unsold at the end of the accounting period and the balance realized $200,000.<\/span><\/p>\n

(b) There was no opening stock and closing work-in-progress.<\/span><\/p>\n

You are required to prepare:<\/span><\/p>\n

(1) Process A account; (2) Process B account; (3) Finished goods stock account <\/span><\/p>\n

\u00a0[Answers: PA: Cost of closing stock = $8,000; Profit = $10,250; <\/span><\/i><\/p>\n

Transfer to PB = $48,000; $12,000 and $60,000; <\/span><\/i><\/p>\n

PB: Cost of closing stock = $14,400; Profit = $26,000; <\/span><\/i><\/p>\n

Transfer to F.S = $93,600; $36,400 and $130,000;<\/span><\/i><\/p>\n

FG: Cost of closing stock = $14,400; Profit = $90,000] <\/span><\/i><\/p>\n

SOLUTION: <\/span><\/b><\/p>\n

Process A Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost <\/span><\/p>\n<\/td>\n

\n

Profit <\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening stock <\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

By Process B account \u00a0\u00a0<\/span><\/p>\n<\/td>\n

\n

48,000<\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

60,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct materials <\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct wages<\/span><\/p>\n<\/td>\n

\n

24,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

24,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct overhead <\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

56,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

56,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Less: Closing stock <\/span><\/p>\n<\/td>\n

\n

8,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

8,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Prime cost<\/span><\/p>\n<\/td>\n

\n

48,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

48,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Factory overhead<\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total cost<\/span><\/p>\n<\/td>\n

\n

48,000<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

48,0003<\/sup><\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Gross profit <\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Transfer price <\/span><\/p>\n<\/td>\n

\n

48,000<\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

60,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

48,000<\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

60,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

Gross profit (20 % on transfer)\u00a0 <\/span><\/i><\/p>\n

= Total cost x % \u00f7 (100 \u2013 %)<\/span><\/i><\/p>\n

= $48,000 x 20 \u00f7 (100 \u2013 20%)<\/span><\/i><\/p>\n

= 48,000 x 20\/80<\/span><\/i><\/p>\n

= $12,000<\/span><\/span><\/i><\/p>\n

\u00a0<\/span><\/i><\/p>\n

Process B Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening stock <\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

By Finished goods account <\/span><\/p>\n<\/td>\n

\n

93,600<\/span><\/p>\n<\/td>\n

\n

36,400<\/span><\/p>\n<\/td>\n

\n

130,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Process A account<\/span><\/p>\n<\/td>\n

\n

48,000<\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

60,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct materials <\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct wages<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct overhead <\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

108,000<\/span><\/p>\n<\/td>\n

\n

12,000<\/span><\/p>\n<\/td>\n

\n

120,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Less: Closing stock <\/span><\/p>\n<\/td>\n

\n

14,400<\/span><\/p>\n<\/td>\n

\n

1,600<\/span><\/p>\n<\/td>\n

\n

16,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Prime cost<\/span><\/p>\n<\/td>\n

\n

93,600<\/span><\/p>\n<\/td>\n

\n

10,400<\/span><\/p>\n<\/td>\n

\n

104,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Factory overhead<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total cost<\/span><\/p>\n<\/td>\n

\n

93,600<\/span><\/p>\n<\/td>\n

\n

10,400<\/span><\/p>\n<\/td>\n

\n

104,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Gross profit<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

26,000<\/span><\/p>\n<\/td>\n

\n

26,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Transfer price <\/span><\/p>\n<\/td>\n

\n

93,600<\/span><\/p>\n<\/td>\n

\n

36,400<\/span><\/p>\n<\/td>\n

\n

130,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

93,600<\/span><\/p>\n<\/td>\n

\n

36,400<\/span><\/p>\n<\/td>\n

\n

130,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

Given and working note: <\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n\n\n\n
\n

Cost of closing stock <\/span><\/i><\/i><\/p>\n<\/td>\n

\n

Unrealized profit <\/span><\/i><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= (Cost x Closing stock) \u00f7 Total cost<\/span><\/i><\/p>\n<\/td>\n

\n

= Closing stock \u2013 Cost of closing stock <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= ($108,000 x $16,000) \u00f7 $120,000<\/span><\/i><\/p>\n<\/td>\n

\n

= 16,000 \u2013 14,400<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= $14,400<\/span><\/i><\/p>\n<\/td>\n

\n

= $1,600<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

Gross profit (20 % on transfer)<\/span><\/i><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= Total cost x 20\/80<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= $104,000 <\/span>x 20\/80<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= $26,000<\/span><\/i><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/b><\/p>\n

Finished Goods Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening Stock<\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

Nil <\/span><\/p>\n<\/td>\n

\n

By Sales account <\/span><\/p>\n<\/td>\n

\n

79,200<\/span><\/p>\n<\/td>\n

\n

120,800<\/span><\/p>\n<\/td>\n

\n

200,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Process B account\u00a0 <\/span><\/p>\n<\/td>\n

\n

93,600<\/span><\/p>\n<\/td>\n

\n

36,400<\/span><\/p>\n<\/td>\n

\n

130,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

93,600<\/span><\/p>\n<\/td>\n

\n

36,400<\/span><\/p>\n<\/td>\n

\n

130,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Less: Closing stock <\/span><\/p>\n<\/td>\n

\n

14,400<\/span><\/p>\n<\/td>\n

\n

5,600<\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

COGS<\/span><\/p>\n<\/td>\n

\n

79,200<\/span><\/p>\n<\/td>\n

\n

30,800<\/span><\/p>\n<\/td>\n

\n

110,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: GP\u00a0 [Sales \u2013 COGS]<\/span><\/p>\n<\/td>\n

\n

–<\/span><\/p>\n<\/td>\n

\n

90,000<\/span><\/p>\n<\/td>\n

\n

90,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Sales\u00a0 price <\/span><\/p>\n<\/td>\n

\n

79,200<\/span><\/p>\n<\/td>\n

\n

120,800<\/span><\/p>\n<\/td>\n

\n

200,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

79,200<\/span><\/p>\n<\/td>\n

\n

120,800<\/span><\/p>\n<\/td>\n

\n

200,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

\u00a0<\/span><\/i><\/p>\n

Given and working note: <\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n\n\n\n
\n

Cost of closing stock <\/span><\/i><\/i><\/p>\n<\/td>\n

\n

Unrealized profit <\/span><\/i><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= (Cost x Closing stock) \u00f7 Total cost<\/span><\/i><\/p>\n<\/td>\n

\n

= Closing stock \u2013 Cost of closing stock <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= ($93,600 x $20,000) \u00f7 $130,000<\/span><\/i><\/p>\n<\/td>\n

\n

= 20,000 \u2013 14,400<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= $14,400<\/span><\/i><\/p>\n<\/td>\n

\n

= $5,600<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

Gross profit <\/span><\/i><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= Sales \u2013 Cost of goods sold<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= $200,000 \u2013 $110,000<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= <\/span><\/i>$90,000<\/span><\/i><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

\u00a0<\/span><\/i><\/p>\n

Click on the photo for FREE <\/span><\/b>e<\/span><\/b>Books<\/span><\/b><\/p>\n

\"\"<\/a><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/i><\/p>\n

\u00a0<\/span><\/i><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 4B<\/span><\/b><\/p>\n

Jaguar Bath Fitting, a leading bathroom accessory manufacturing company, provides you following information about classic tap: [amount in \u2018000]<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

Transactions<\/span><\/p>\n<\/td>\n

\n

Casting $<\/span><\/p>\n<\/td>\n

\n

Finishing $<\/span><\/p>\n<\/td>\n

\n

Finished $<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Inventory 1st<\/sup>\u00a0 January\u00a0 <\/span><\/p>\n<\/td>\n

\n

5,000<\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Materials <\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Direct labour <\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Factory overhead <\/span><\/p>\n<\/td>\n

\n

8,000<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Inventory 31st<\/sup> January <\/span><\/p>\n<\/td>\n

\n

3,000<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

8,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Inter process profit <\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

5,000<\/span><\/p>\n<\/td>\n

\n

2,250<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Profit % on transfer price <\/span><\/p>\n<\/td>\n

\n

20%<\/span><\/p>\n<\/td>\n

\n

25%<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Sales for the month $180,000<\/span><\/p>\n

Required: (1) Casting process account; (2) Finishing process account <\/span><\/p>\n

(3) Finished goods account; (5) Statement of actual realized profit; (6) Value of closing stock for balance sheet <\/span><\/p>\n

[Answers: CP: Cost of closing stock = $3,000; Profit = $10,000; <\/span><\/i><\/p>\n

Transfer to PB = $40,000; $10,000 and 50,000;<\/span><\/i><\/p>\n

FP: Cost of closing stock = $8,750; Profit = $40,000; <\/span><\/i><\/p>\n

Transfer to F.S = $106,250; $53,750 and 160,000;<\/span><\/i><\/p>\n

F.S: Cost of closing stock = $5,440; Profit = $13,000; <\/span><\/i><\/p>\n

Actual realized profit: $10,000; $43,750 and $12,690; Total = $66,440;<\/span><\/i><\/p>\n

Closing stock for balance sheet: Cost value = $17,190 and total value = $21,000]<\/span><\/i><\/p>\n

\u00a0<\/span><\/b><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Casting Process Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars<\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening stock<\/span><\/p>\n<\/td>\n

\n

5,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

5,000<\/span><\/p>\n<\/td>\n

\n

By Finishing Process A\/c<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

50,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct materials <\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Direct labour <\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

35,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

35,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Less: Closing stock<\/span><\/p>\n<\/td>\n

\n

3,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

3,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Prime cost<\/span><\/p>\n<\/td>\n

\n

32,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

32,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Production OH<\/span><\/p>\n<\/td>\n

\n

8,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

8,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total\/Process cost<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

\u2013<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Gross profit<\/span><\/p>\n<\/td>\n

\n

\u2013<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Transfer Price<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

50,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

50,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

Gross profit (20% on transfer)<\/span><\/i><\/p>\n

= Total cost x 20\/80<\/span><\/i><\/p>\n

= 40,000 <\/span>x 20\/80<\/span><\/i><\/p>\n

= $8,000<\/span><\/i><\/p>\n

\u00a0<\/span><\/i><\/p>\n

Finishing Process Account<\/span><\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars<\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening stock<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

5,000<\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n

\n

By Finished goods A\/c <\/span><\/p>\n<\/td>\n

\n

106,250<\/span><\/p>\n<\/td>\n

\n

53,750<\/span><\/p>\n<\/td>\n

\n

160,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Casting process <\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

50,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Direct materials <\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Direct labour <\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

105,000<\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n

\n

120,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Less: Closing stock<\/span><\/p>\n<\/td>\n

\n

8,750<\/span><\/p>\n<\/td>\n

\n

1,250<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Prime cost<\/span><\/p>\n<\/td>\n

\n

96,250<\/span><\/p>\n<\/td>\n

\n

13,750<\/span><\/p>\n<\/td>\n

\n

110,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Production OH<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

\u2013<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total\/Process cost<\/span><\/p>\n<\/td>\n

\n

106,250<\/span><\/p>\n<\/td>\n

\n

13,750<\/span><\/p>\n<\/td>\n

\n

120,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Gross profit<\/span><\/p>\n<\/td>\n

\n

\u2013<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Transfer Price<\/span><\/p>\n<\/td>\n

\n

106,250<\/span><\/p>\n<\/td>\n

\n

53,750<\/span><\/p>\n<\/td>\n

\n

160,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

106,250<\/span><\/p>\n<\/td>\n

\n

53,750<\/span><\/p>\n<\/td>\n

\n

160,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

Given and working note: <\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n\n\n\n
\n

Cost of closing stock <\/span><\/i><\/i><\/p>\n<\/td>\n

\n

Unrealized profit <\/span><\/i><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= (Cost x Closing stock) \u00f7 Total cost<\/span><\/i><\/p>\n<\/td>\n

\n

= Closing stock \u2013 Cost of closing stock <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= ($105,000 <\/span>x $10,000) \u00f7 $120,000<\/span><\/span><\/i><\/p>\n<\/td>\n

\n

= 10,000 \u2013 8,750<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= $8,750<\/span><\/i><\/p>\n<\/td>\n

\n

= $1,250<\/span><\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

Gross profit (25% on transfer)<\/span><\/i><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= Total cost x 25\/75<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= $120,000 <\/span>x 25\/75<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= <\/span><\/i>$40,000<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Finished Goods Account<\/span><\/b><\/h3>\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n

\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Total<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

To Opening stock<\/span><\/p>\n<\/td>\n

\n

12,750<\/span><\/p>\n<\/td>\n

\n

2,250<\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n

\n

By Sales account <\/span><\/p>\n<\/td>\n

\n

113,560<\/span><\/p>\n<\/td>\n

\n

66,440<\/span><\/p>\n<\/td>\n

\n

180,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Finishing Process <\/span><\/p>\n<\/td>\n

\n

106,250<\/span><\/p>\n<\/td>\n

\n

53,750<\/span><\/p>\n<\/td>\n

\n

160,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Cost<\/span><\/p>\n<\/td>\n

\n

119,000<\/span><\/p>\n<\/td>\n

\n

56,000<\/span><\/p>\n<\/td>\n

\n

175,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Less: Closing stock<\/span><\/p>\n<\/td>\n

\n

5,440<\/span><\/p>\n<\/td>\n

\n

2,560<\/span><\/p>\n<\/td>\n

\n

8,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total\/Process cost<\/span><\/p>\n<\/td>\n

\n

113,560<\/span><\/p>\n<\/td>\n

\n

53,440<\/span><\/p>\n<\/td>\n

\n

167,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Add: Gross profit <\/span><\/p>\n<\/td>\n

\n

\u2013<\/span><\/p>\n<\/td>\n

\n

13,000<\/span><\/p>\n<\/td>\n

\n

13,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Sales <\/span><\/p>\n<\/td>\n

\n

113,560<\/span><\/p>\n<\/td>\n

\n

66,440<\/span><\/p>\n<\/td>\n

\n

180,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

113,560<\/span><\/p>\n<\/td>\n

\n

66,440<\/span><\/p>\n<\/td>\n

\n

180,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

Given and working note: <\/span><\/i><\/p>\n\n\n\n\n\n\n\n\n\n\n\n
\n

Cost of closing stock <\/span><\/i><\/i><\/p>\n<\/td>\n

\n

Unrealized profit <\/span><\/i><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= (Cost x Closing stock) \u00f7 Total cost<\/span><\/i><\/p>\n<\/td>\n

\n

= Closing stock \u2013 Cost of closing stock <\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= ($119,000 <\/span>x $8,000 given) \u00f7 $175,000<\/span><\/span><\/i><\/p>\n<\/td>\n

\n

= 10,000 \u2013 8,750<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= $5,440<\/span><\/i><\/p>\n<\/td>\n

\n

= $1,250<\/span><\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

Gross profit (25% on transfer)<\/span><\/i><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= Total cost x 25\/75<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= $120,000 <\/span>x 25\/75<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

= <\/span><\/i>$40,000<\/span><\/i><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/i><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Statement of Actual Realized Profit<\/span><\/b><\/h3>\n\n\n\n\n\n\n\n\n\n
\n

Sources <\/span><\/p>\n<\/td>\n

\n

Process<\/span><\/p>\n<\/td>\n

\n

Unrealized Profit<\/span><\/p>\n<\/td>\n

\n

Actual Profit<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

Profit<\/span><\/p>\n<\/td>\n

\n

Opening<\/span><\/p>\n<\/td>\n

\n

Closing<\/span><\/p>\n<\/td>\n

\n

Difference \u00b1<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

1<\/span><\/i><\/p>\n<\/td>\n

\n

2<\/span><\/i><\/p>\n<\/td>\n

\n

3<\/span><\/i><\/p>\n<\/td>\n

\n

4<\/span><\/i><\/p>\n<\/td>\n

\n

5 = 3 \u2013 4<\/span><\/i><\/p>\n<\/td>\n

\n

6 = 2 + 5<\/span><\/i><\/p>\n<\/td>\n<\/tr>\n

\n

Casting Process Account <\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

\u2013<\/span><\/p>\n<\/td>\n

\n

\u2013<\/span><\/p>\n<\/td>\n

\n

\u2013<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Finishing Process Account <\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

5,000<\/span><\/p>\n<\/td>\n

\n

1,250<\/span><\/p>\n<\/td>\n

\n

3,750<\/span><\/p>\n<\/td>\n

\n

43,750<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Finished Stock<\/span><\/p>\n<\/td>\n

\n

13,000<\/span><\/p>\n<\/td>\n

\n

2,250<\/span><\/p>\n<\/td>\n

\n

2,560<\/span><\/p>\n<\/td>\n

\n

(310)<\/span><\/p>\n<\/td>\n

\n

12,690<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total <\/span><\/p>\n<\/td>\n

\n

63,000<\/span><\/p>\n<\/td>\n

\n

7,250<\/span><\/p>\n<\/td>\n

\n

3,810<\/span><\/p>\n<\/td>\n

\n

3,440<\/span><\/p>\n<\/td>\n

\n

66,440<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

Value of closing stock for balance sheet<\/span><\/b><\/h3>\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Cost value <\/span><\/p>\n<\/td>\n

\n

Total value <\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Casting process<\/span><\/p>\n<\/td>\n

\n

3,000<\/span><\/p>\n<\/td>\n

\n

3,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Finishing process<\/span><\/p>\n<\/td>\n

\n

8,750<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Finished goods<\/span><\/p>\n<\/td>\n

\n

5,440<\/span><\/p>\n<\/td>\n

\n

8,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Total \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n<\/td>\n

\n

$17,190<\/span><\/p>\n<\/td>\n

\n

$21,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/b><\/p>\n

\u00a0<\/span><\/b><\/p>\n

#####<\/span><\/p>\n\n\n\n
\n

Problems\u00a0 and\u00a0 Answers\u00a0 of\u00a0 Process\u00a0 Costing<\/span><\/b><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/b><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 4A<\/span><\/b><\/p>\n

Forming and finishing processes are the two consecutive processes required in course of manufacturing ceramics products. The data for the process operations are stated below by JK Ceramics Ltd: <\/span><\/p>\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Forming process<\/span><\/p>\n<\/td>\n

\n

Finishing process<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Material<\/span><\/p>\n<\/td>\n

\n

80,000<\/span><\/p>\n<\/td>\n

\n

30,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Labour<\/span><\/p>\n<\/td>\n

\n

50,000<\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Finished goods<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

There was no opening stock in any process. Output of each process in passed on to next process and to finished goods at 20% of transfer price.<\/span><\/p>\n

Required: (a) forming process account; (b) Finishing process account; <\/span><\/p>\n

[Answers: (1) Cost of closing stock = $10,000; Profit = $30,000; <\/span><\/i><\/p>\n

PB: $120,000; $30,000 and $150,000;<\/span><\/i><\/p>\n

(2) Cost of closing stock = $8,500; Profit = $47,500; <\/span><\/i><\/p>\n

F.S: $161,500, $76,000 and $237,500; <\/span><\/i><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 4B<\/span><\/b><\/p>\n

A finished product is produced through two processes. The expenses of each of each process of the last month are given by EP Manufacturing Company:<\/span><\/p>\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Process A<\/span><\/p>\n<\/td>\n

\n

Process B<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Materials<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Wages<\/span><\/p>\n<\/td>\n

\n

8,000<\/span><\/p>\n<\/td>\n

\n

10,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Stock at the end<\/span><\/p>\n<\/td>\n

\n

2,000<\/span><\/p>\n<\/td>\n

\n

4,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Percentage of profit on transfer price<\/span><\/p>\n<\/td>\n

\n

20%<\/span><\/p>\n<\/td>\n

\n

20%<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Required: (a) Process A account; (b) Process B account<\/span><\/p>\n

\u00a0[Answers: Cost of closing stock = $2,000; Profit = $4,000; <\/span><\/i><\/p>\n

PB: $16,000; $4,000 and $20,000;<\/span><\/i><\/p>\n

Cost of closing stock = $3,680; Profit = $11,500; <\/span><\/i><\/p>\n

F.S: $42,320, $15,180 and $57,500<\/span><\/i>; <\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 4C<\/span><\/b><\/p>\n

Dolphin Pashmina Craft manufactures pashmina items. The following transactions are related to scarf: <\/span><\/p>\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Yarn<\/span><\/p>\n<\/td>\n

\n

Weave<\/span><\/p>\n<\/td>\n

\n

Finished goods<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Direct materials <\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

60,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Direct labour <\/span><\/p>\n<\/td>\n

\n

30,000<\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Production overhead <\/span><\/p>\n<\/td>\n

\n

30,000<\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Closing stock <\/span><\/p>\n<\/td>\n

\n

20,000<\/span><\/p>\n<\/td>\n

\n

40,000<\/span><\/p>\n<\/td>\n

\n

30,000<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Profit charged on transfer or sales price <\/span><\/p>\n<\/td>\n

\n

20%<\/span><\/p>\n<\/td>\n

\n

20%<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The company does not maintain opening stock. Sales for the period were $250,000.<\/span><\/p>\n

Required: (1) Yarn process Account; (2) Weave process Account; (3) Finished goods Account <\/span><\/p>\n

[Answer: (1) GP = $20,000; (2) Cost of closing stock $35,556; GP = $40,000;<\/span><\/i><\/p>\n

(3) Cost of closing stock $21,667; Profit $80,000]<\/span><\/i><\/p>\n

\u00a0<\/span><\/b><\/p>\n

Here, Amount = Rs = $ = \u00a3 = \u20ac = <\/span>\u20b9<\/span> = Af = <\/span>\u09f3 <\/span>= Nu = Rf = <\/span>\u0dbb\u0dd4<\/span> = Br = P = Birr = Currency of your country<\/span>\u00a0 <\/span><\/p>\n

PROBLEM: 4D<\/span><\/b><\/p>\n

Gorkha Metal Uddhyog has following data related to process for grill:<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n
\n

Particulars <\/span><\/p>\n<\/td>\n

\n

Process A<\/span><\/p>\n<\/td>\n

\n

Process B<\/span><\/p>\n<\/td>\n

\n

Process C<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Opening stock <\/span><\/p>\n<\/td>\n

\n

7,500<\/span><\/p>\n<\/td>\n

\n

9,000<\/span><\/p>\n<\/td>\n

\n

22,500<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Direct materials <\/span><\/p>\n<\/td>\n

\n

15,000<\/span><\/p>\n<\/td>\n

\n

15,750<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Direct wages <\/span><\/p>\n<\/td>\n

\n

11,200<\/span><\/p>\n<\/td>\n

\n

11,250<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Factory expenses <\/span><\/p>\n<\/td>\n

\n

10,500<\/span><\/p>\n<\/td>\n

\n

4,500<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Closing stock <\/span><\/p>\n<\/td>\n

\n

3,700<\/span><\/p>\n<\/td>\n

\n

4,500<\/span><\/p>\n<\/td>\n

\n

11,250<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Profit % on transfer price to next process<\/span><\/p>\n<\/td>\n

\n

25%<\/span><\/p>\n<\/td>\n

\n

20%<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

Inter process profit on opening stock <\/span><\/p>\n<\/td>\n

\n

\u2013<\/span><\/p>\n<\/td>\n

\n

1,500<\/span><\/p>\n<\/td>\n

\n

8,250<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Sales for the period were $140,000.<\/span><\/p>\n

Required: (1) Process A account; (2) Process B account; (3) Finished goods account; (4) Statement of actual realized profit<\/span><\/p>\n

\u00a0[Answer: (1) GP = $13,500; (2) Cost of closing stock $3,750; GP = $22,500;<\/span><\/i><\/p>\n

(3) Cost of closing stock $7,500; Profit $16,250; (4) Actual profit $57,500<\/span><\/i><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

EP <\/span>Online <\/span>Study <\/span><\/p>\n

Thank you for investing your time.<\/span><\/i><\/p>\n

Please comment on the article.<\/span><\/i><\/p>\n

You can help us by sharing this post on your social media platform.<\/span><\/i><\/p>\n

\u00a0<\/span><\/p>\n

Jay G<\/span>o<\/span>o<\/span>g<\/span>l<\/span>e<\/span>, Jay YouTube<\/span>, Jay Social Media<\/span><\/span><\/p>\n

\u091c\u092f<\/span> \u0917\u0942<\/span>\u0917<\/span>\u0932<\/span>.<\/span> \u091c\u092f<\/span> \u092f\u0941\u091f\u094d\u092f\u0941\u092c<\/span>,<\/span> \u091c\u092f<\/span> \u0938\u094b\u0936\u0932<\/span> \u092e\u0940\u0921\u093f\u092f\u093e <\/span><\/p>\n

\u00a0<\/span><\/b><\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

    \u00a0 Process Costing The cost accounting system used by process is called process costing. To prepare bread, we need mixing of white flour, ghee, sugar, eggs, baking powder etc. From this mixture, different size of bread can be prepared. These sized are baked in oven. Baked bread cut and packed. \u00a0 Process costing […]<\/p>\n","protected":false},"author":19997,"featured_media":5994,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2306,11,2919],"tags":[3010,3007,3009,2995,2011,3008],"writers":[144],"yoast_head":"\nProcess Costing | Inter-Process Profit| Problem and Solution<\/title>\n<meta name=\"description\" content=\"Process Costing | Inter-process profit | Finished Stock Account | Statement of Actual Realized Profit | Problems and Solutions\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/eponlinestudy.com\/process-costing-inter-process-profit-finished-stock-account-statement-of-actual-realized-profit-problems-and-solutions\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta 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