Question

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

Sales	$	656,000
Direct labor cost	$	82,000
Raw material purchases	$	138,000
Selling expenses	$	101,000
Administrative expenses	$	42,000
Manufacturing overhead applied to work in process	$	210,000
Actual manufacturing overhead costs	$	221,000

Inventories	Beginning		Ending
Raw materials	$	8,100	$	10,800
Work in process	$	5,100	$	21,000
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.

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.

Mason Company Schedule of Cost of Goods Manufactured Direct materials: Beginning raw materials inventory Add: Purchases of raw materials Total raw materials available Raw materials used in production Total manufacturing costs 0 Cost of goods manufactured

2)

3)

Answer 1

SCHEDULE OF COST OF GOODS MANUFACTURED
Direct materials:
Beginning raw materials inventory	$ 8,100
Add: Purchases of raw materials	$ 138,000
Total raw materials available	$ 146,100
Less: Ending raw materials	$ 10,800
Raw materials used in production		$           135,300
Direct labor cost		$             82,000
Manufacturing overhead applied to work in process		$           210,000
Manufacturing cost added to WIP during the year		$           427,300
Add: Beginning WIP		$               5,100
Total manufacturing cost		$           432,400
Less: Ending WIP		$             21,000
Cost of goods manufactured		$           411,400
COST OF GOODS SOLD
Beginning finished goods inventory	$               79,000
Add: Cost of goods manufactured	$             411,400
Cost of goods available for sale	$             490,400
Less: Ending finished goods inventory	$               25,500
Unadjusted cost of goods sold		$           464,900
Add: Overhead underapplied [221000-210000]		$             11,000
Adjusted cost of goods sold		$           475,900
INCOME STATEMENT
Sales revenue		$           656,000
Cost of goods sold [adjusted]		$           475,900
Gross profit		$           180,100
Less: Selling & administrative expenses:
Selling expenses	$             101,000
Administrative expenses	$               42,000
Total selling and administrative expenses		$           143,000
Net operating income		$             37,100