Question

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

Sales	$	659,000
Direct labor cost	$	86,000
Raw material purchases	$	135,000
Selling expenses	$	102,000
Administrative expenses	$	49,000
Manufacturing overhead applied to work in process	$	203,000
Actual manufacturing overhead costs	$	225,000

Inventories	Beginning		Ending
Raw materials	$	8,000	$	10,800
Work in process	$	5,500	$	20,600
Finished goods	$	76,000	$	25,800

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 1:

oo van twn 10 11 Mason Company Schedule of cost of goods manufactured Direct Material: Raw Material, Beginning $8,000.00 Add: Purchase of Raw Material $135,000.00 Total Raw material available $143,000.00 Less: Raw Material, Ending $10,800.00 Raw material used in production $132,200.00 Direct Labor cost $86,000.00 Applied Manufacturing Overhead $203,000.00 Total Manufacturing Costs $421,200.00 Add: Work in Process, Beginning $5,500.00 Subtotal $426,700.00 Less: Work in Process, Ending $20,600.00 Cost of goods manufactured $406,100.00 12 14 20 22 25 26 27 28 29 30 31 32 33 1 34 35 36 37 38 +85 (44) ) Sheet159 Sheet158 ) Sheet160 Sheet161

Solution 2:

I Mason Company Schedule of cost of goods manufactured Cost of goods manufactured $406,100.00 Add: Finished Goods, Beginning $76,000.00 Total Goods available for sale $482,100.00 Less: Finished Goods, Ending $25,800.00 Unadjusted Cost of goods Sold $456,300.00 Add: Under -applied Overhead ($225000-$203000) $22,000.00 Adjusted Cost of goods sold $478,300.00 15 16 17 23 24 25 29 30 31 32 33 34 35 36 37 20 -85 (44) ) Sheet159 Sheet158 ) Sheet160 Sheet161

Solution 3:

AR Mason Company Income Statement Sales Less: Cost of goods sold Gross Profit Less: Expenses: Selling Expenses Administrative expenses Net Income $659,000.00 $478,300.00 $180,700.00 10 11 $102,000.00 $49,000.00 $29,700.00 12 15 16 17 19 23 24 25 29 30 31 32 33 34 35 36 37 20 -85 (44) ) Sheet159 Sheet158 ) Sheet160 Sheet161