Question

if the goods are transferred from department a to department b at a price so as to include a profit of 25% on cost the amount of stock reserve on a closing stock of 12000 in department b will be?

Answer 1

ANSWER :

• ❖ If the goods are transferred from Department A to Department B at a price so as to include a profit of 25% on cost and the amount of Stock Reserve on closing stock of Rs. 12,000 in Department B will be Rs. 2,400.

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SOLUTION :

❒ Given :-

• The goods are transferred from Department A to Department B at a price so as to include a profit of 25% on cost.

• The amount of closing stock of in Department B is Rs. 12,000.

❒ To Calculate :-

• Amount of the Stock Reserve = ?

❒ Required Formula :-

• $\dag \: \: \underline{ \boxed{\sf{Amount \: \: of \: \: Reserve \: \: Stock = \dfrac{Amount \: \: of \: \: Closing \: \: Stock \times Profit \: \: on \: \: Transfer \: \: Price}{Transfer \: \: Price}}}}$

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❒ Calculation :-

It is given that,

• Closing Stock of Department B = Rs. 12,000

However,

• Goods transferred by Department A to Department B at a price which includes 25% profit on cost.

Hence,

• $\tt{\bigstar \: The \: \: amount \: \: of \: \: Reserve \: \: Stock = \dfrac{Amount \: \: of \: \: Closing \: \: Stock \times Profit \: \: on \: \: Transfer \: \: Price}{Transfer \: \: Price}}$

$\tt{\longrightarrow \: The \: \: amount \: \: of \: \: Stock \: \: Reserve = \dfrac{Rs. \: 12,000 \times 25}{100 + 25}}$

$\tt{\longrightarrow \: The \: \: amount \: \: of \: \: Stock \: \: Reserve = \dfrac{Rs. \: 12,000 \times 25}{125}}$

$\tt{\longrightarrow \: The \: \: amount \: \: of \: \: Stock \: \: Reserve = \dfrac{Rs. \: 3,00,000 \times 25}{125}}$

$\tt{\therefore \: The \: \: amount \: \: of \: \: Stock \: \: Reserve = \underline{Rs. \: 2,400}}$

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◉ Working Note :-

Here,

• Department A transfers goods to Department B at a profit of 25% of cost.

So,

• If cost is Rs. 100

Then,

• The profit is Rs. 25

Therefore,

• Transfer Price = Rs. 150