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 $ 658,000 $ 87,000 $ 137,000 $ 108,000 $ 48,000 $ 209,000 $ 226,000 Inventories Raw materials Work in process Finished goods Beginning $ 8,100 $ 6,000 $ 73,000 Ending $ 10,100 $ 20,200 $ 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. Complete this question by entering your answers in the tabs below.

Answer 1

Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials inventory, beginning	8100
Add: Purchases of raw materials	137000
Total raw materials available	145100
Less: Raw materials inventory, ending	10100
Raw materials used in production		135000
Direct labor		87000
Manufacturing overhead applied		209000
Total manufacturing costs		431000
Add: Beginning work in process inventory		6000
		437000
Less: Ending work in process inventory		20200
Cost of goods manufactured		416800
Schedule of Cost of Goods Sold
Finished goods inventory, beginning	73000
Add: Cost of goods manufactured	416800
Cost of goods available for sale	489800
Less: Finished goods inventory, ending	25800
Unadjusted cost of goods sold	464000
Add: Underapplied overhead	17000	=226000-209000
Adjusted cost of goods sold	481000
Income Statement
Sales		658000
Cost of goods sold		481000
Gross margin .		177000
Selling and administrative expenses:
Selling expenses	108000
Administrative expense	48000	156000
Net operating income		21000