Question

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

Sales	$	655,000
Direct labor cost	$	82,000
Raw material purchases	$	131,000
Selling expenses	$	106,000
Administrative expenses	$	43,000
Manufacturing overhead applied to work in process	$	202,000
Actual manufacturing overhead costs	$	223,000

   

Inventories	Beginning of Year		End of Year
Raw materials	$	8,200	$	10,400
Work in process	$	5,600	$	20,700
Finished goods	$	79,000	$	25,500

   

Required:

1.	Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.

	Mason Company Schedule of Cost of Goods Manufactured Direct materials: Raw materials available for use Raw materials used in production Total manufacturing costs Cost of goods manufactured

2.	Prepare a schedule of cost of goods sold.

3.	Prepare an income statement.

	Mason Company Income Statement 0 Selling and administrative expenses: 0 $0

(Sorry for the quality. This is all I could really grab for this problem but I am hoping I put enough info to where this should make sense. Thank you.)

Answer 1

1) schedule of cost of goods manufactured
direct material:
Raw material inventory-beginning				8200
add: purchase of raw material				131000
total raw material available				139200
less: raw material inventory-ending				10400
Raw material used in production					128800
Direct labor cost					82000
manufacturing overhead applied to WIP					202000
Total manufacturing cost					412800
add: work in process inventory-beginning					5600
less: work in process inventory-ending					20700
Cost of goods manufactured					397700
2) schedule of cost of goods sold
Inventory of finished goods at beginning				79000
add: cost of goods manufactured				397700
cost of goods available for sale				476700
less: inventory of finished goods at the end				25500
cost of goods sold-unadjusted				451200
add: underapplied overhead (223000-202000)				21000
Cost of goods sold				472200
3) Income statement
sales				655000
less: cost of goods sold				472200
Gross margin				182800
less: selling & administrative expenses
selling expenses				106000
administrative expenses				43000
Net operating income				33800

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