ColdD Pvt. Ltd. is a well-established cold drink manufacturing company specializing in producing a variety of refreshing beverages. The company…

CA Intermediate · Cost and Management Accounting · MTP · September 2025
ColdD Pvt. Ltd. is a well-established cold drink manufacturing company specializing in producing a variety of refreshing beverages. The company operates a modern production facility where advanced techniques and efficient processes are employed to ensure consistency, taste, and customer satisfaction. For this, the company's renowned product 'Pinaco' go through a meticulous two major process system, wherein, Process-I involves water purification, mixing & blending of essential ingredients and Process-II involves carbonation, chilling & filling the bottles. Later on, the product is transferred to the finished stock. Following data is provided relating to the manufacturing process of product 'Pinaco' for the month of September: Particulars Process - I (₹) Process - II (₹) Opening stock 15,15,000 18,18,000 Direct materials 30,30,000 31,81,500 Direct wages 22,62,400 22,72,500 Factory overheads 21,21,000 9,09,000 Closing stock 7,47,400 9,09,000 Inter-process profit included in opening stock 3,03,000 The profit ratio on which output is transferred to next process is as follows: Process Transferred to Profit Process - I Process - II 1/3 rd of cost Process - II Finished Stock 1/4th of cost The opening and closing stock of finished stock are - 45,45,000 (which includes - 16,66,500 as Inter-process profit) and - 22,72,500 respectively. Stock in processes is valued at prime cost. Finished stock is valued at the price at which it is received from process II. Sales during the period are - 2,82,80,000. You are required to PREPARE the following accounts showing the profit element at each stage: (a) Process- I Account (b) Process- II Account (c) Finished Stock Account

Suggested Answer and Working Notes:

Process- I Account Particulars Total (₹) Cost (₹) Profit (₹) Particulars Total (₹) Cost (₹) Profit (₹) Opening stock 15,15,000 15,15,000 Process- II A/c* 1,09,08,000 81,81,000 27,27,000 Direct materials 30,30,000 30,30,000 Closing Stock 7,47,400 7,47,400 Direct wages 22,62,400 22,62,400 Prime Cost 68,07,400 68,07,400 Overheads 21,21,000 21,21,000 Total Cost 89,28,400 89,28,400 Profit** 27,27,000 27,27,000 1,16,55,400 89,28,400 27,27,000 1,16,55,400 89,28,400 27,27,000 *Transfer price = (Total Cost - Closing stock) (1 + 1/3) = (₹ 89,28,400 -7,47,400) (4/3) = 1,09,08,000 **Profit on transfer = 1,09,08,000 × 1/4th = 27,27,000 Process- II Account Particulars Total (₹) Cost (₹) Profit (₹) Particulars Total (₹) Cost (₹) Profit (₹) Opening stock 18,18,000 15,15,000 3,03,000 Finished Stock A/c** 2,27,25,000 1,53,01,500 74,23,500 Transferred from Process- I 1,09,08,000 81,81,000 27,27,000 Closing stock* 9,09,000 7,57,500 1,51,500 Direct materials 31,81,500 31,81,500 Direct wages 22,72,500 22,72,500 Prime cost 1,81,80,000 1,51,50,000 30,30,000 Overheads 9,09,000 9,09,000 Total cost 1,90,89,000 1,60,59,000 30,30,000 Profit*** 45,45,000 45,45,000 2,36,34,000 1,60,59,000 75,75,000 2,36,34,000 1,60,59,000 75,75,000 *Cost of Closing Stock = (₹ 1,51,50,000 /1,81,80,000) x 9,09,000 = 7,57,500 **Transfer price = (Total Cost - Closing stock) (1 + 1/4) = (₹ 1,90,89,000 -9,09,000) (5/4) = 2,27,25,000 ***Profit on transfer = 2,27,25,000 × 1/5th = 45,45,000 Finished Stock Account Particulars Total (₹) Cost (₹) Profit (₹) Particulars Total (₹) Cost (₹) Profit (₹) Opening stock 45,45,000 28,78,500 16,66,500 Costing P&L A/c 2,82,80,000 1,66,49,850 1,16,30,150 Process- II 2,27,25,000 1,53,01,500 74,23,500 Closing stock* 22,72,500 15,30,150 7,42,350 Profit 32,82,500 32,82,500 3,05,52,500 1,81,80,000 1,23,72,500 3,05,52,500 1,81,80,000 1,23,72,500 *Cost of Closing Stock = (Cost of transfer from Process-II / Transfer price from Process-II) × Value of closing stock = (₹ 1,53,01,500 /2,27,25,000) x 22,72,500 = 15,30,150

Topics: Process & Operation Costing

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