When a manufacturing firm transfers goods to its own retail outlet at a price above cost, the difference between the transfer price and the manufacturing cost is:

When goods are transferred at a price above cost (i.e., at market price), the manufacturing profit — the excess of transfer price over manufacturing cost — is credited to the profit and loss account to reflect the efficiency of the factory. A provision for unrealised profit is created only for unsold finished goods remaining in stock, not for the entire manufacturing profit.