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1. Here it is the margin is 100 then how can we say that the margin is 50 after goods transferred from one department to another(colour department onwards). 2. Another question is it possible to transfer goods to Another department by setting some margin if it is the case then the other departments got their profit before the sale of product then is it necessary to distribute the Profit among each department after selling the product?
Answers (1)
These are notional profit and aren’t real and 100 is cost and 50 is margin is just an example. This is done to evaluate the performance of each dept and whether to continue a dept or not. These profits i.e., interdepartmental profits are eliminated while arriving the overall performance of entity.
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