Cost of process Rs1,60,000 and profit to be charged on the transfer price is 20% What is the inter process profit?
A. Rs 32,000
B. Rs 40,000
C. Rs 48,000
D. Rs 54,000
Answer: Option B
Solution (By Examveda Team)
Inter process profit= (160000 / (100% - 20%) - 160000)
= 200000 - 160000 = Rs. 40000.
1/5 on sale or transfer = 1/4 on cost