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 $ 655,000 $ 84,000 $ 135,000 $ 108,000 $ 42,000 $ 203,000 $ 230,000 Inventories Raw materials Work in process Finished goods Beginning $ 8,000 $ 5,700 $ 74,000 Ending $10,000 $ 20,300 $ 25,900 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 Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials. Mason Company

Answer 1

Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials inventory, beginning	8000
Add: Purchases of raw materials	135000
Total raw materials available	143000
Less: Raw materials inventory, ending	10000
Raw materials used in production		133000
Direct labor		84000
Manufacturing overhead applied		203000
Total manufacturing costs		420000
Add: Beginning work in process inventory		5700
		425700
Less: Ending work in process inventory		20300
Cost of goods manufactured		405400
Schedule of Cost of Goods Sold
Finished goods inventory, beginning	74000
Add: Cost of goods manufactured	405400
Cost of goods available for sale	479400
Less: Finished goods inventory, ending	25900
Unadjusted cost of goods sold	453500
Add: Underapplied overhead	27000	=230000-203000
Adjusted cost of goods sold	480500
Income Statement
Sales		655000
Cost of goods sold		480500
Gross margin .		174500
Selling and administrative expenses:
Selling expenses	108000
Administrative expense	42000	150000
Net operating income		24500