INTER PROCESS PROFIT A LTD PRODUCES PRODUCT X WHICH PASSES THROUGH TWO PROCESSES BEFORE IT IS COMPLETED AND TRASFERRED TO FINISH STOCK THE FOLLOWING.

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Presentation transcript:

INTER PROCESS PROFIT A LTD PRODUCES PRODUCT X WHICH PASSES THROUGH TWO PROCESSES BEFORE IT IS COMPLETED AND TRASFERRED TO FINISH STOCK THE FOLLOWING DATA RELATED TO APRIL 2013

OUTPUT OF PORCESS 1 IS TRANSFERRED TO PROCESS 2 AT 25% PROFIT ON THE TRANSFER PRICE OUTPUT OF PROCESS 2 IS TRANSFERRED TO FINISHED STOCK AT 20% PROFIT ON THE TRANSFER PRICE STOCKS IN PROCESS ARE VALUED AT PRIME COST FINISHED SOTCK IS VALUTED AT THE PRICE AT WHICH IT IS RECEIVED FROM PROCESS 2 SALES DURING THE PERIOD IS RS 1400000 PARTICULAR PROCESS 1 PROCESS 2 FINISHED STOCK OPENING STOCK 7500 9000 22500 DIRECT MATERIALS 15000 15750 DIRECT WAGES 11200 11250 FACTORY OVERHEADS 10500 4500 CLOSING STOCK 3700 INTER PROCESS PROFIT INCLUDING IN OPENING STOCK - 1500 8250

PREPARE THE FOLLOWING PROCESS ACCOUNTS FINISHED STOCK ACCOUNT STATEMENT SHOWING TOTAL PROFIT AND UNREALISED PROFIT

SOLUTION AND EXPLANATION INTER PROCESS PROFIT NORMALLY OUTPUT OF A PROCESS IS TRANSFER TO NEXT AT COST BUT SOME TIMES OUTPUT OF A PROCESS MAY BE TRANSFER TO NEXT PROCESS AT COST+ PROFIT IT IS CALLED INTER PROCESS PROFIT IN SUCH CASE PROBLEM OF UNREALISED PROFIT ARISE ON STOCK OF PROCESS IN SUCH CASE PROCESS A/C SHALL BE PROPARED AS FOLLOWS PROCESS A/C DR CR PARTICULAR COST PROFIT TOTAL

PRIME COST THE TERM PRIME COST REFERS TO DIRECT COST OF MANUFACTURING AN ITEM . IT IS CALCULATED BY ADDING COST OF RAW MATERIALS TO THE COST OF LABOUR DIRECTLY ASSOCIATED WITH PRODUCTION PROCESS IN OTHER WORDS INDIRECT MANUFACTURING COST ARE NOT PART OF PRIME COST

PROCESS -1 PARTICULAR COST PROFIT TOTAL CALCULATION TO OPENING STOCK 7500 TO DIRECT MATERIAL 15000 BY TRANSFER TO P-1 40500 13500 54000 TO DIRECT WAGES 11200 33700 LESS CLOSING STOCK 3700 30000 + FACTORY OH 10500 CALCULATION SP= CP+PROFIT 40500X25/75 100=75+25 =13500

PROCESS-2 PARTICLUALR COST PROFIT TOTAL PARTICULAR TO PROCESS-1 40500 13500 54000 BY TRANSFER TO FINISHED STOCK 75750 36750 112500 TO OP STOCK 7500 1500 9000 TO DIRECT MATERIAL 15750 TO WAGES 11250 75000 15000 90000 - CLOSING STOCK 3750 750 4500 + TO FACTORY OVERHEAD 14250 + PROFIT 22500 CALCULATION : SP= CP+PROFIT CALCULATION OF CLOSING STOCK : 90000----15000 PROFIT 100=80+20 4500-----? 90000X20/80 = 22500 = 750

FINISHED STOCK CALCULATION : PROFIT ON CLOSING STOCK CALCULATION OF PROFIT: PROFIT =SP-CP 135000------------45000 11250*45000 = 3750 = 140000-123750 11250-------------? 135000 = 16250 PARTICULAR COST PROFIT TOTAL TO PORCESS- 2 75750 36750 112500 BY SALES 82500 57500 140000 TO OPENING STOCK 14250 8250 22500 90000 45000 135000 -CLOSING STOCK 7500 3750 11250 41250 123750 16250

STATEMENT SHOWING ACTUAL REALISED PROFIT PARTICULAR APPARENT PROFIT PROFIT IN OPENING STOCK PROFIT IN CLOSING STOCK DIFFERNCE ACTUAL PROFIT PROCESS 1 13500 -- --- PROCESS 2 22500 1500 750 23250 FINISHED STOCK 16250 8250 3750 4500 20750 TOTAL 57500

BHAKTI MANISH DHANWANI M.COM (KSKV KACHCHH UNIVERSITY ,MARCH 2017) C.A INTER (INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA ,NOV 2010) B.COM ( KSKV KACHCHH UNIVERSITY , APRIL2009)