Question

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

Sales	$	659,000
Direct labor cost	$	88,000
Raw material purchases	$	131,000
Selling expenses	$	106,000
Administrative expenses	$	46,000
Manufacturing overhead applied to work in process	$	203,000
Actual manufacturing overhead costs	$	229,000

Inventories	Beginning		Ending
Raw materials	$	8,700	$	10,800
Work in process	$	5,500	$	20,100
Finished goods	$	75,000	$	25,600

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

Answer-1)-

MASON COMPANY
COST OF GOODS MANUFACTURED REPORT
PARTICULARS	AMOUNT
	$
Beginning Raw Materials Inventory	8700
Add- Raw Material Purchases	131000
Total raw materials available	139700
Less-Ending Raw Material Inventory	10800
Raw Materials Used in production	128900
Direct Labor	88000
Manufacturing Overhead applied to work in process	203000
Total current manufacturing costs	419900
Add- Beginning Work in Process Inventory	5500
Total work in process	425400
Less- Ending Work in Process Inventory	20100
Cost of goods manufactured	405300

2)-

MASON COMPANY
COST OF GOODS SOLD
PARTICULARS		Amount
		$
Beginning finished goods inventory		75000
Add: Cost of goods manufactured		405300
Cost of goods available for sale		480300
Less: Ending finished goods inventory		25600
Unadjusted Cost of goods sold		454700
Add- Under applied overhead	($229000-$203000)	26000
Adjusted Cost of goods sold		480700

3)-

MASON COMPANY
INCOME STATEMENT
PARTICULARS	AMOUNT	AMOUNT
	$	$
Sales		659000
Less-Cost of goods sold		480700
Gross margin		178300
Less- Selling & administrative expenses		152000
Selling expenses	106000
Administrative expenses	46000
Net Operating income		26300