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cd ltd a company engaged in the manufacture of specialist marine engines operates a 610020

CD Ltd, a company engaged in the manufacture of specialist marine engines, operates a historic job cost accounting system that is not integrated with the financial accounts. At the beginning of May 2000 the opening balances in the cost ledger were as follows:


Stores ledger control account

85 400

Work in progress control account

167 350

Finished goods control account

49 250

Cost ledger control account

302 000

During the month, the following transaction took place:




42 700

Issues to production

63 400

to general maintenance

1 450

to construction of manufacturing equipment

7 650

Factory wages:

Total gross wages paid

124 000

£12 500 of the above gross wages were incurred on the construction of manufacturing equipment, £35 750 were indirect wages and the balance was direct. Production overheads: the actual amount incurred, excluding items shown above, was £152 350; £30 000 was absorbed by the manufacturing equipment under construction and under-absorbed overhead written off at the end of the month amounted to £7550. Royalty payments: one of the engines produced is manufactured under license. £2150 is the amount that will be paid to the inventor for the month’s production of that particular engine. Selling overheads: £22 000. Sales: £410 000. The company’s gross profit margin is 25% on factory cost. At the end of May stocks of work in progress had increases by £12 000. The manufacturing equipment under construction was completed within the month, and transferred out the cost ledger at the end of the month.


Prepare the relevant control accounts, costing profit and loss account, and any other accounts you consider necessary to record the above transactions in the cost ledger for May 2000.

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