Question

Goods are transferred from department A to department B at a price 50% above cost. If the closing stock of department is Rs27000. Compute the stock reserve.

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Answer 1

To calculate the stock reserve, we need to determine the cost of the closing stock and the selling price. The stock reserve can be calculated by subtracting the cost price from the selling price. In this case, the stock reserve is Rs9000.

Step-by-step explanation:

To calculate the stock reserve, we need to first determine the cost of the closing stock.

Let's assume the cost price of the closing stock is x.

Since the goods are transferred from department A to department B at a price 50% above cost, department B receives the goods at a price of 1.5x.

We know that the closing stock of department B is Rs27000, so we can set up the following equation:

1.5x = 27000

Solving for x, we find that the cost price of the closing stock is Rs18000.

Now, to calculate the stock reserve, we need to find the difference between the cost price and the selling price.

Since the selling price is 50% above cost, the selling price is 1.5 times the cost price.

Therefore, the stock reserve is:

Selling Price - Cost Price = 1.5x - x = 0.5x = 0.5 * 18000 = Rs9000