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

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