Question

Exercise 3-6 Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement [LO3-3) 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 $ 659,000 $ 86,000 $ 132,000 $ 104,000 $ 43,000 $207,000 $ 225,000 Inventories Raw materials Work in process Finished goods Beginning Ending $ 8,100 $ 10,400 $ 5,100 $ 20,800 $ 79,000 $25,100 ces 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

Answers

• Requirement [1]

Schedule of Cost of Goods Manufactured
Direct materials:
Beginning raw material inventory	$8,100
Add: Purchase of raw material	$132,000
Total raw materials available	$140,100
Less: Ending raw material inventory	$10,400
Raw material used in production		$129,700
Direct labor cost		$86,000
Manufacturing Overhead applied		$207,000
Total manufacturing costs		$422,700
Add: Beginning WIP Inventory		$5,100
Total cost of Work in Process		$427,800
Less: Ending WIP Inventory		$20,800
Cost of Goods manufactured		$407,000

• [2]

Schedule of Cost of Goods Sold
Beginning Finished Goods Inventory	$79,000
Add: Cost of Goods manufactured	$407,000
Cost of Goods available for sale	$486,000
Less: Ending finished goods inventory	$25,100
Unadjusted Cost of Goods Sold	$460,900
Add: Under applied Overheads	$18,000
Cost of Goods Sold [adjusted]	$442,900

• [3]

Sales		$659,000
Cost of Goods Sold		$442,900
Gross Profits		$216,100
Operating Expenses:
Selling expense	$104,000
Administrative expense	$43,000
Total Operating Expense		$147,000
Net Income		$69,100