Goods are transferred from Department X to Department Y at a price so as to include a profit of 33.33% on cost. If the value of closing stock of Department Y is ` 48,000, then the amount of stock reserve on closing stock will be

Question

Quizplus · Accepted Answer

The amount of stock reserve on closing stock will be 12,000. This is because the goods are transferred from Department X to Department Y at a price so as to include a profit of 33.33% on cost. This means that the cost of the goods to Department Y is 75% of the selling price. Therefore, the value of the closing stock of Department Y is 75% of ` 48,000, which is ` 36,000. The stock reserve is then 25% of the cost of the goods, which is ` 9,000.

Goods Are Transferred from Department X to Department Y at a Price