Question

The following data from the just completed year are taken from the accounting records of Mason Company: $658,000 $ 84,000 $131,000 $105,000 $50,000 $209,000 $227,000 Sales Direct labor cost Raw material purchases Selling expenses Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead costs Beginning Ending 8,800 $10, 700 $ 5,500 $20, 000 $71,000 $25,400 Inventories Raw materials Work in process Finished goods 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 o Goods Sold. 3. Prepare an income statement.

Answer 1

MASON COMPANY Cost of goods Manufactured Schedule Direct Material Raw Material inventory Beginning $ 8,800 Add: Raw materials purchases $ 131,000 Total Raw materials available for use $ 139,800 Less: Raw materials inventory Ending $ 10,700 Direct Materials used in production Direct Labour Manufacturing overhead applied Total Manufacturing Costs Add: Work in process inventory Beginning Less: work in process inventory Ending Cost of goods Manufactured $ $ $ $ $ $ $ 129,100 84,000 209,000 422,100 5,500 (20,000) 407,600 MASON COMPANY Cost of goods Sold Finished goods inventory, beginning $ 71,000 |Add: Cost of Goods manufactured $ 407,600 Cost of goods available for sale $ 478,600 Less: Finished goods inventory, ending $ 25,400 Unadjusted cost of goods sold $ 453,200 |Add: Under applied overhead $ 18,000 Adjusted Cost of goods sold $ 471,200 Note : Under Applied Overhead =Actual manufacturing overhaed cost -Manufacturing overhead applied to work in process = $227,000-$209,000 = $18,000

MASON COMPANY Income Statement Sales Less: Cost of Goods Sold Gross Margin Less: Selling and administrative Expenses Selling Expenses Administrative Expenses Net Operative Income $ $ $ 658,000 471,200 186,800 $ $ 105,000 50,000 $ $ 155,000 31,800