Question

In: Accounting

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

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

  
Sales $ 650,000
Direct labor cost $ 81,000
Raw material purchases $ 137,000
Selling expenses $ 101,000
Administrative expenses $ 43,000
Manufacturing overhead applied to work in process $ 202,000
Actual manufacturing overhead costs $ 225,000
Inventories Beginning Ending
Raw materials $ 8,400 $ 10,400
Work in process $ 5,100 $ 20,200
Finished goods $ 71,000 $ 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.

Solutions

Expert Solution

Solution 1:

Mason Company
Schedule of cost of goods manufactured
Particulars Details Amount
Direct Material:
Beginning inventory $8,400.00
Raw material purchases $137,000.00
Total Raw material available $145,400.00
Ending inventory $10,400.00
Raw material used in production $135,000.00
Direct Labor $81,000.00
Manufacturing overhead Applied $202,000.00
Total manufacturing costs $418,000.00
Add: Opening WIP $5,100.00
Total cost of work in process $423,100.00
Less: ending WIP $20,200.00
Cost of goods manufactured $402,900.00

Solution 2:

Mason Company
Schedule of cost of goods Sold
Particulars Amount
Beginning finished goods inventory $71,000.00
Add: Cost of goods manufactured $402,900.00
Cost of goods available for sale $473,900.00
Less: ending finished goods inventory $25,900.00
Unadjusted cost of goods sold $448,000.00
Add: Under-applied overhead ($225,000 - $202,000) $23,000.00
Cost of goods sold $425,000.00

Solution 3:

Mason Company
Income Statement
Particulars Details Amount
Sales $650,000.00
Cost of goods sold $425,000.00
Gross Profit $225,000.00
Selling and administrative expenses:
Selling expenses $101,000.00
Administrative Expenses $43,000.00 $144,000.00
Net Income $81,000.00

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