Question

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

Sales	$	657,000
Direct labor cost	$	85,000
Raw material purchases	$	139,000
Selling expenses	$	105,000
Administrative expenses	$	49,000
Manufacturing overhead applied to work in process	$	209,000
Actual manufacturing overhead costs	$	229,000

Inventories	Beginning		Ending
Raw materials	$	8,100	$	10,300
Work in process	$	5,700	$	20,900
Finished goods	$	77,000	$	25,100

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

8100 139000 147100 10300 MANSON COMPANY Schedule of Cost of goods Manufactured Direct Materials: Beginning Raw material Raw material purchased Total raw materials available for use Less: Ending Raw material Raw Materials used in production Direct labor Manufacturing over head applied to work in process Total manufacturing costs Add: Beginning Work in process Total cost of work in process Less:Ending Work in process Cost of goods Manufactured 136800 85000 209000 430800 5700 436500 209001 415600

MANSON COMPANY Schedule of Cost of goods sold Beginning finished goods Add: Cost of goods manufactured Cost of goods available for sale Less Ending finished goods Cost of goods sold Add: Underapplied MOH/ Less: Overapplied MOH Adjusted Cost of goods sold 77000 415600 492600 25100 467500 20000 487500 MANSON COMPANY Income Statement Sales Less: Cost of goods sold Gross profit Selling and administrative expenses: Selling expenses Administrative expenses Net Income 657000 487500 169500 105000 49000 154000 15500