Question

The following data from the just completed year are taken from the accounting records of Mason Company: Sales Direct labor cost Raw material purchases Selling expenses Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead costs $ 659.000 $ 85,000 $ 133,000 $ 109,000 $ 45.000 $ 200,000 $ 228,000 ces Inventories Raw materials Work in process Finished goods Beginning $ 8,100 $ 5,100 $ 76.000 Ending $ 10, 100 $ 20,400 $25.300 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.

Answer 1

Solution

Mason company
Schedule of Cost of Goods Manufactured
Direct Material
Raw material Inventory Beginning	$ 8,100
Raw material Purchased	$ 133,000
Raw material available for use	$ 141,100
Less: Raw material Inventory Ending	$ 10,100
Direct Material Used		$ 131,000
Direct labor		$ 85,000
Total Manufacturing overheads applied		$ 200,000
Total manufacturing Cost During the month		$ 416,000
Add: Work in process Beginning		$ 5,100
Total Work in Process		$ 421,100
Less: Work in progress Ending		$ 20,400
Cost of Goods Manufactured		$ 400,700

.

Mason company
Schedule of cost of goods sold
Beginning Finished Goods Inventory		$ 76,000
Add: Cost of goods manufactured		$ 400,700
Goods Available for sale		$ 476,700
Less :Ending Finished goods Inventory		$ 25,300
Unadjusted Cost of Goods Sold		$ 451,400
Underapplied Manufacturing overheads		$ 28,000
Adjusted cost of goods sold		$ 479,400

.

Mason company
Income statement
Sales revenue		$ 659,000
Less: Cost of goods sold		$ 479,400
Gross profit		$ 179,600
Selling and administrative expenses
Selling expenses	$ 109,000
Administrative expenses'	$ 45,000	$ 154,000
Net income		$ 25,600