Question

he following data from the just completed year are taken from the accounting records of Mason Company: Sales $ 652,000 Direct labor cost $ 83,000 Raw material purchases $ 135,000 Selling expenses $ 106,000 Administrative expenses $ 40,000 Manufacturing overhead applied to work in process $ 201,000 Actual manufacturing overhead costs $ 225,000 Inventories Beginning of Year End of Year Raw materials $ 8,700 $ 10,200 Work in process $ 5,800 $ 20,700 Finished goods $ 79,000 $ 25,100 equired: 1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials. 2. 2 -Prepare a schedule of cost of goods sold. 3. Prepare an income statement.

Answer 1

Mason Company
Schedule of Cost of Goods Manufactured
Direct materials:
Beginning raw materials inventory	$8,700
Add: Purchases of raw materials	135,000
Raw materials available for use	143,700
Less: Ending raw materials inventory	10,200
Raw materials used in production		$133,500
Direct labor		83,000
Manufacturing overhead		201,000
Total manufacturing costs		417,500
Add: Beginning work in process inventory		5,800
		423,300
Less: Ending work in process inventory		20,700
Cost of goods manufactured		$402,600
2
Mason Company
Schedule of Cost of Goods Sold
Beginning finished goods inventory	$79,000
Add: Cost of goods manufactured	402,600
Goods available for sale	481,600
Less: Ending finished goods inventory	25,100
Unadjusted cost of goods sold	456,500
Add: Underapplied overhead	24000
Adjusted cost of goods sold	$480,500
3
Mason Company
Income Statement
Sales		$652,000
Cost of goods sold		$480,500
Gross margin		171,500
Selling and administrative expenses:
Selling expenses	106,000
Administrative expense	40,000
		146,000
Net operating income		$25,500