Inter process profits with both opening and closing stocks in processes - Problems
|Process I||Process II||Finished Stock|
| Opening Stock|
included in Opening stock
Output of Process I is transferred to Process II at 25% profit on the transfer price and output of Process II is transferred to finished stock at 20% profit on the transfer price. Stocks in process are valued at prime cost. Finished stock is valued at the price at which it is received from Process II. Sales during the period were 56,000.
Required : Prepare Process Cost Accounts and Finished Stock Account showing the profit element at each stage.
| Transfer from|
There was no wastage in Process B and the output was transferred to Finished stock at a price calculated to yield a profit of 33⅓% on total cost. The finished goods stock as at 31st December, _5 was 9000/- and shown in the Balance Sheet as closing stock.
Was the stock shown in Balance Sheet, justified? If not, what should have been the value of closing stock in your opinion?
| Opening stock|
Profit on cost of each process
Inter process profit for
Stock in processes are valued at prime cost and finished stock has been valued at price at which it is received from process II. Sales during the period were 7,00,000.
Prepare and compute-
(a) Process cost accounts showing profit element at each stage;
(b) actual realised profit; and
(c) stock valuation for balance sheet purposes.
The output of process A is transferred to process B at a price with gives process A a profit of 25% thereon, and the output of process B is transferred to finished goods at a price which gives process B a profit of 20% thereon.
The following information is provided in respect of the year ended 31st March, _7:
|Process A||Process B|
| Stock on 1st April, _6|
Stock on 31st March, _7
Process stocks consist of products which have passed through the process completely and are valued at prime cost to the process concerned.
Finished goods were in stock on 1st April, _6 to the value of 10,200 and on 31st March, _7 to the value of 6,200. Both the opening and closing stocks were valued at the price at which they were transferred from process B.
Sales amounting to 68,400 were effected during the year and included all the goods in stock at the beginning of the year.
The Reserves on 1st April, _6 for unrealized profit included in stock valuation were: Process B - 350; Finished Goods 3,430.
Prepare the Process accounts, Finished Goods Account and Trading Account for the year ended 31st March, _7.
|Process I||Process II|
| Raw materials drawn from stores|
Labour as extracted from cards
In the Process Cost Accounts an overhead charge is made at 20% of labour and it is the practice to transfer the goods from Process I to Process II at a price which includes a profit of 25 per cent on the transfer price and from Process II to Finished Goods Account at a price which includes a profit of 20 per cent on the transfer price.
Stocks valued as indicated below were:
| Raw Materials in Factory:|
Used in Process I (at cost)
Used in Process II (at cost)
Goods at completion of Process I
situated in department where Process II
is carried out (at transfer price)
Finished goods at transfer price
(a) Show the Process Cost Accounts for the period.
(b) Assuming the indirect expenses were subsequently found to amount to 24,590, calculate the actual net profit of the business for the period.