Interprocess profit-% age calculation on transfer price equalisation with % on cost

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Student
57 Points Posted on 16 October 2016

I am having problem in understanding while solving problems on Process Costing- Interprocess Profit case.

Can anyone explain me,how -

- 25% Profit on transfer price is equal to 331/3 % Profit on cost

-20% Profit on transfer price is equal to 25% on cost

Kindly elaborate in detail.

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On 16 October 2016 at 21:45 Report
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Student CA IPC / IPCC
22 Points Posted on 16 October 2016
Example :-
Let Take transfer price - 100 Rs
And if profit is 25% of Transfer price , then profit will be = 100 × 25% = 25 .
Therefore cost will be = 100 - 25 = 75
Therefore profit on cost = profit / cost × 100
= 25/75 ×100
= 33.33%
2 Reply
On 16 October 2016 at 22:57
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Student
57 Points Posted on 17 October 2016

Thanx for your kind help.

Reply
On 17 October 2016 at 06:51

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