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CMA Intermediate · Cost Accounting · Cost Book-Keeping

In a non-integrated cost ledger system, when raw materials worth ₹48,000 are issued from stores to production as direct materials, the entry in the cost ledgers is:

Issue of direct material to production debits Work-in-Process Control and credits Stores Ledger Control, both by ₹48,000. Stores stock falls and the cost of production rises. Charging factory overhead would only be appropriate for indirect materials.

  1. AWork-in-Process Control A/c Dr. ₹48,000 to Stores Ledger Control A/c ₹48,000Correct
  2. BStores Ledger Control A/c Dr. ₹48,000 to Work-in-Process Control A/c ₹48,000
  3. CWork-in-Process Control A/c Dr. ₹48,000 to Cost Ledger Control A/c ₹48,000
  4. DFactory Overhead Control A/c Dr. ₹48,000 to Stores Ledger Control A/c ₹48,000

Explanation

Direct material issued to production is charged to Work-in-Process, and the stores account is reduced. So WIP Control is debited and Stores Ledger Control is credited by ₹48,000. Debiting factory overhead would be wrong because the material is direct, not indirect.

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