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 $ 652,000 $ 89,000 $ 139,000 $ 107,000 $ 46,000 $ 228,000 $ 207,000 Inventories Raw materials Work in process Finished goods Beginning $ 8,500 $ 5,000 $ 76,000 Ending $ 10,900 $ 20,600 $ 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. Required 1 Required 2 Required 3

Answer 1

8500 139000 147500 10900 MASON COMPANY Schedule of Cost of goods Manufactured Direct Materials: Beginning Raw material Raw material purchased Total raw materials available for use Less: Ending Raw material Raw Materials used in production Direct labor Manufacturing over head applied to work in process Total manufacturing costs Add: Beginning Work in process Total cost of work in process Less:Ending Work in process Cost of goods Manufactured 136600 89000 228000 453600 5000 458600 20600 438000

76000 438000 MASON COMPANY Schedule of Cost of goods sold Beginning finished goods Add: Cost of goods manufactured Cost of goods available for sale Less Ending finished goods Cost of goods sold Add: Underapplied MOH/ Less: Overapplied MOH Adjusted Cost of goods sold 514000 25800 488200 -21000 467200 652000 467200 MASON COMPANY Income Statement Sales Less: Cost of goods sold Gross profit Selling and administrative expenses: Selling expenses Administrative expenses Net Income 184800 107000 46000 153000 31800

Gross profit = Sales - Cost of goods sold

Net Income = Gross profit - Total Selling and administrative expenses

Overapplied Manufacturing overhead (MOH) = 207 000 - 228 000 = -21 000