Question

The following data from the just completed year are taken from the accounting records of Mason Company:

Sales	$	651,000
Direct labor cost	$	85,000
Raw material purchases	$	140,000
Selling expenses	$	106,000
Administrative expenses	$	42,000
Manufacturing overhead applied to work in process	$	210,000
Actual manufacturing overhead costs	$	223,000

Inventories	Beginning		Ending
Raw materials	$	8,900	$	10,100
Work in process	$	5,800	$	20,700
Finished goods	$	70,000	$	25,600

Required:

1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.

2. Prepare a schedule of cost of goods sold. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold.

3. Prepare an income statement.

Mason Company
Schedule of Cost of Goods Manufactured
Direct materials:
Total raw materials available
Raw materials used in production
Total manufacturing costs
		0
Cost of goods manufactured

	Mason Company Schedule of Cost of Goods Sold

Mason Company Income Statement 0 Selling and administrative expenses: 0 $0

Answer 1

MASON COMPANY Schedule of Cost of goods Manufactured Direct Material Raw Material inventory Beginning $ 8,900 Add: Raw materials purchases $ 140,000 Total Raw materials available $ 148,900 Less: Raw materials inventory Ending $ 10,100 Raw Materials used in production Direct Labour Cost Manufacturing overhead applied Total Manufacturing Costs Add: Work in process inventory Beginning Less: work in process inventory Ending Cost of goods Manufactured $ $ $ $ $ $ $ 138,800 85,000 210,000 433,800 5,800 20,700 418,900 MASON COMPANY Schedule of Cost of goods Sold Finished goods inventory, beginning $ 70,000 Add: Cost of Goods manufactured $ 418,900 Cost of goods available for sale $ 488,900 Less: Finished goods inventory, ending $ 25,600 Unadjusted cost of goods sold $ 463,300 Add: Under applied overhead $ 13,000 Adjusted Cost of goods sold $ 476,300 Note : Under Applied Overhead =Actual manufacturing overhaed cost -Manufacturing overhead applied to work in process =$223,000-$210,000 = $13,000

MASON COMPANY Income Statement Sales Less: Cost of Goods Sold Gross Margin Less: Selling and administrative Expenses Selling Expenses $ Administrative Expenses $ Net Operative Income $ $ $ 651,000 476,300 174,700 106,000 42,000 $ $ 148,000 26,700