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 $ 650,000 $ 85,000 $ 137,000 $ 107,000 $ 47,000 $ 202,000 $ 220,000 Inventories Raw materials Work in process Finished goods Beginning $ 8,000 $ 5,400 $ 74,000 Ending $ 10,900 $ 20,000 $ 25, 400 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

Solutiuon

Mason company
Schedule of Cost of Goods Manufactured
Direct Material
Raw material Inventory Beginning	$ 8,000
Raw material Purchased	$ 137,000
Raw material available for use	$ 145,000
Less: Raw material Inventory Ending	$ 10,900
Direct Material Used		$ 134,100
Direct labor		$ 85,000
Total Manufacturing overheads applied		$ 202,000
Total manufacturing Cost During the month		$ 421,100
Add: Work in process Beginning		$ 5,400
Total Work in Process		$ 426,500
Less: Work in progress Ending		$ 20,000
Cost of Goods Manufactured		$ 406,500

.

Mason company
Schedule of cost of goods sold
Beginning Finished Goods Inventory		$ 74,000
Add: Cost of goods manufactured		$ 406,500
Goods Available for sale		$ 480,500
Less :Ending Finished goods Inventory		$ 25,400
Unadjusted Cost of Goods Sold		$ 455,100
Underapplied Manufacturing overheads		$ 18,000
Adjusted cost of goods sold		$ 473,100

.

Mason company
Income statement
Sales revenue		$ 650,000
Less: Cost of goods sold		$ 473,100
Gross profit		$ 176,900
Selling and administrative expenses
Selling expenses	$ 107,000
Administrative expenses'	$ 47,000	$ 154,000
Net income		$ 22,900