A certain product passes through three processes before it is completed. The output of each process is charged to next process at a price calculated to give a profit of 20% on transfer price.[i.e. 25% on the cost price] The output of Process III is charged to finished goods stock account on a similar basis. There was no work in progress at the beginning of the year and overheads had been ignored. Stocks in each process have been valued at prime cost of the processes.
The following data are obtained at the end of December 2007
|
Particulars |
Process I Rs. |
Process II Rs. |
Process III Rs. |
Finished Stock Rs |
|
Direct Material |
30,000 |
20,000 |
40,000 |
|
|
Direct Wages |
20,000 |
30,000 |
10,000 |
|
|
Stock as on 31st December |
10,000 |
20,000 |
30,000 |
30,000 |
|
Sales during the year |
— |
— |
— |
1,70,000 |
From the above information prepare,
[a] Process cost accounts showing the profit element at each stage
[b] Actual realized profit
[c] Stock valuation as would appear in the Balance Sheet