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 $ 651,000 $ 85,000 $ 136,000 $ 103,000 $ 44,000 $ 204,000 $ 222,000 Inventories Raw materials Work in process Finished goods Beginning $ 8,700 $ 5,200 $ 72,000 Ending $ 10,600 $ 20,000 $ 25,300 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

1	Mason Company
	Schedule of Cost of Goods Manufactured
	Direct Materials:
	Beginning raw material inventory	8,700
	Add: Purchase of raw material	136,000
	Total raw material available	144,700
	Less Ending raw material	10,600
	Raw materail used in production		134,100
	Direct Labour		85,000
	Manufacturing overhead applied to work in process		204,000
	Total manufacturing cost		423,100
	Add: beginning inventory		5,200
			428,300
	Less: Ending WIP Inventory		20,000
	Cost of Goods manufactured		408,300
2	Mason Company
	Schedule of Cost of Goods Sold
	Beginning Finished goods inventory	72,000
	Add: Cost of goods manufactured	408,300
	Cost of goods available for sale	480,300
	Less: Ending Finished goods inventory	25,300
	Unadjusted cost of goods sold	455,000
	Add: Underapplied overhead	18,000
	Adjusted cost of goods sold	473,000
3	Mason Company
	Income Statement
	Sales		651,000
	Less: cost of goods sold		473,000
	Gross Profit		178,000
	Selling and admin expense
	Selling Expense	103,000
	Admin Expense	44,000	147,000
	Net Income		31,000