In the absence of the chief 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 following relevant information is provided to you:
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Balance at the beginning of the month: |
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Stores ledger control account |
50,000 |
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Work-in-progress control account |
40,000 |
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Finished goods control account |
70,000 |
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Pre-paid production overhead b/f from previous month: |
6,000 |
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Transactions during the month: |
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Materials purchased |
1,50,000 |
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Materials issued– |
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To production: |
60,000 |
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To factory maintenance: |
8,000 |
68,000 |
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Materials transferred from batches |
10,000 |
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Total wages paid – |
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Direct workers |
50,000 |
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Indirect workers |
10,000 |
60,000 |
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Direct wages charged to batches |
40,000 |
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Recorded non-productive time of direct workers |
10,000 |
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Selling and distribution overheads incurred |
12,000 |
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Other production overheads incurred |
24,000 |
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Sales |
2,00,000 |
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Cost of finished goods sold |
1,60,000 |
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Cost of goods completed and transferred into finished goods during the month |
1,30,000 |
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Physical value of work-in-progress at the end of the month |
80,000 |
The production overhead absorption rate is 150% of direct wages charged to work-in-progress.
Required:
Prepare the following accounts for the month:
- Stores ledger control account
- Work-in-progress account
- Finished goods control account
- Production overhead control account
- Profit and loss account