In the absence of the accountant you have been asked to prepare a month?s cost accounts for a company which operates a batch costing system fully integrated with the financial accounts. The cost clerk has provided you with the following information, which he thinks is relevant:

...........................................................................(?)Balances at beginning of month:Stores ledger control account ...................24,175Work in progress control account ............19,210Finished goods control account ...............34,164Prepayments of production overheadsbrought forward from previous month ....2,100

.............................................................................(?)Transactions during the month:Materials purchased .....................................76,150Materials issued: to production ..................26,350for factory maintenance ................................3,280Materials transferred between batches ......1,450

The production overhead absorption rate is 150 per cent of direct wages and it is the policy of the company to include a share of production overheads in the cost of capital equipment constructed in the factory.

Required:(a) Prepare the following accounts for the month: stores ledger control account wages control account work in progress control account finished goodscontrol account production overhead control account profit/loss account.(b) Identify any aspects of the accounts which you consider should be investigated.(c) Explain why it is necessary to value a company?s stocks at the end of each period and also why, in a manufacturing company, expense items such as factory rent, wages of direct operatives, power costs, etc. are included in the value of work in progress and finished goods stocks.

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Direct Indirect workers workers (£) (£) Total wages paid: Net 17646 3342 Employees deductions 4364 890 Direct wages charged to batches from 15236 work tickets 5230 Recorded non-productive time of direct workers Direct wages incurred on production of capital equipment, for use in the factory 2670 Direct Indirect workers workers (£) (£) Selling and distribution overheads incurred 5240 Other production overheads incurred 12200 Sales 75400 Cost of finished goods sold Cost of goods completed and transferred into finished goods store during the month Physical stock value of work in progress at end of month 59830 62130 24360