Closing Stock out of transfer 4.800 2.800 Sale 1,40,000 1,12,000 Add : Transfer 35.000 40.000 1,75,000 1,52,000 Less: Returns (7.000 (10.000) Net Sales plus Transfer 1.68.000 1.42.000 38,500 Rate of Gross profit 46,000 x 100 = 22.916% x 100 = 32.394% 1,68,000 1,42,000 4,800 32.394% = 1,555 2,800 x 22.916% = 641 Illustration 5 M/s Alpha , has a factory with two manufacturing departments X and Y. Part of the output of department X is transferred to department Y for further processing and the balance is directly 47 Unrealised Profit transferred to selling department. The entire production of department Y is directly transferred to the selling department. Inter-departmental stock transfers are made as follows: X department to y department at 33-173% over departmental cost. X department to selling department at 50% over departmental cost. Y department to selling department at 25% over departmental cost. The following information is given for the year ending 31st March 2013 Department x Department y Selling Department Units 3 Units 3 Units Opening stock Finished Goods 60 60,000 20 40,000 50 1,28,000 Raw materials Raw material consumed 1,82,000 20,000 Labour charges 70,000 32,000 Sales 120 4.80,000 Closing stock Finished Goods 40 50 60 Out of the total transfer by X department 30 units were transferred to selling department, while the remaining to department Y. Per unit material and labour consumption of X department on production to be transferred directly to the selling department is 300 per cent of the labour and material consumption on units transferred to y department. General Administration expenses 1,80,000