Question

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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 $ 87,000 $ 132,000 $ 109,000 $ 43,000 $209,000 $ 223,000 Inventories Raw materials Work in process Finished goods Beginning $ 8,400 $ 5,400 $ 75,000 Ending $ 10,600 $ 20,500 $25,500 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. Required 1 Required 2 Required 3

Answer 1

	Mason Company
	Schedule of Cost of goods Manufactured
	Direct Materials
	Raw Material Inventory beginning	$         8,400
Add:	Purchases of raw Material	$   1,32,000
	Total Raw Material available	$   1,40,400
Less:	Raw Material Inventory ending	$       10,600
	Raw Material used in production		$   1,29,800
	Direct Labor		$       87,000
	Manufacturing overhead		$   2,09,000
	Total manufacturing cost		$   4,25,800
Add:	Beginning work in process inventory		$         5,400
			$   4,31,200
Less:	Ending work in process inventory		$       20,500
	Cost of goods manufactured		$   4,10,700
	Mason Company
	Schedule of Cost of Goods Sold
	Finished Goods Inventory Beginning	$       75,000
Add:	Cost of goods manufactured	$   4,10,700
	Cost of goods available for sale	$   4,85,700
Less:	Finished Goods Inventory Ending	$       25,500
	Unadjusted cost of goods sold	$   4,60,200
Add:	Underapplied Overheads	$       14,000
	Adjusted cost of goods sold	$   4,74,200
	Workings:
2	Underapplied Overheads = Actual Manufacturing overheads - Manufacturing overheads applied
	Underapplied Overheads = $223000 - $2,09,000 = $14,000
	Mason Company
	Income Statement
	Sales		$   6,59,000
Less:	Cost of Goods Sold		$   4,74,200
	Gross Margin		$   1,84,800
Less:	Selling and Administrative Expenses:
	Selling Expense	$   1,09,000
	Administrative Expense	$       43,000	$   1,52,000
	Net Operating Income		$       32,800