Reference no: EM132652702

Question - Mali Yote Limited is a company engaged in the manufacture of specialist marine engines. It operates a job costing accounting system which is not integrated with financial accounts.

At the beginning of the month of May 2019, the operating balances in the cost ledger were as follows:

Sh. '000'

Stores ledger control account 85,000

Work in progress control account 167,000

Finished goods control account 49,000

Cost ledger control account 302,000

During the month, the following transactions took place.

Materials:

Purchases 42,700

Issues to:

Production 63,400

General maintenance 1,400

Assembling of manufacturing equipment 7,600

Factory wages: Total wages paid 124,000

Of the total wages paid. Shs.12,500,000 was incurred in the assembly of manufacturing equipment. Shs.35,700,000 was indirect wages and the balance was direct wages.

Other production overhead costs incurred amounted to Shs.152,000,000. Shs.30,000,000 of which was absorbed by the manufacturing equipment under assembly while Shs.7,500,000 was under absorbed overhead costs written off.

One of the engines manufactured by the company is produced under license. During the month of May 2002. Shs.2,100,000 was paid as royalty for that particular engine.

Selling overheads and distribution overhead costs were as follows:

Sh. '000'

Selling overheads 22,000

Distribution overheads 410,000

The company's gross profit margin is 25% on factory cost.

At the end of May 2002, the stock of work in progress had increased by Shs.12, 000,000. The Manufacturing equipment under assembly was completed within the month and transferred out of the cost ledger at the end of the month.

Required -

(i) Prepare Cost ledger control account.

(ii) Prepare Stores ledger control account.

(iii) Prepare Work in progress control account.

(iv) Prepare Finished goods control account.

(v) Prepare Costing profit and loss account.