You should attempt to answer this question yourself before looking up the suggested answer, which appears on pages 837-9. If any part of your answer is incorrect, check back carefully to make sure you understand where you went wrong.

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 1980 the opening balances in the cost ledger were as follows:

£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 £152350; £30000 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 licence. £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: £410000.
The company's gross profit margin is 25% on factory cost.
At the end of May stocks of work in progress had increased by £12000. The manufacturing equipment under construction was completed within the month, and transferred out of the cost ledger at the end of the month.
Required:
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 1980

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Stores ledger control account Work in progress control account Finished goods control account Cost ledger control account During the month, the following transactions took place: Materials: () 85 400 167350 49 250 302 000 Purchases Issues to production to general maintenance to construction of manufacturing equipment 42700 63 400 1450 7650