Question

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

Sales	$	650,000
Direct labor cost	$	84,000
Raw material purchases	$	130,000
Selling expenses	$	103,000
Administrative expenses	$	41,000
Manufacturing overhead applied to work in process	$	201,000
Actual manufacturing overhead costs	$	222,000

Inventories	Beginning		Ending
Raw materials	$	9,000	$	10,300
Work in process	$	5,900	$	20,300
Finished goods	$	73,000	$	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.

Answer 1

Mason company
Schedule of Cost of Goods Manufactured
Direct Material
Raw material Inventory Beginning	$          9,000.00
Raw material Purchased	$    1,30,000.00
Raw material available for use	$    1,39,000.00
Less: Raw material Inventory Ending	$        10,300.00
Direct Material Used		$     1,28,700.00
Direct labor		$         84,000.00
Manufacturing overheads applied		$     2,01,000.00
Total manufacturing Cost		$     4,13,700.00
Add: Work in process Beginning		$           5,900.00
Total Work in Process		$     4,19,600.00
Less: Work in progress Ending		$         20,300.00
Cost of Goods Manufactured		$     3,99,300.00

Mason company
Schedule of cost of good sold
Beginning Finished Goods Inventory		$         73,000.00
Add: Cost of goods manufactured		$     3,99,300.00
Goods Available for sale		$     4,72,300.00
Less :Ending Finished goods Inventory		$         25,900.00
Unadjusted Cost of Goods Sold		$     4,46,400.00
Underapplied Manufacturing overheads		$         21,000.00
Adjusted cost of goods sold		$     4,67,400.00

Mason company
Income statement
Sales revenue		$     6,50,000.00
Less: Cost of goods sold		$     4,67,400.00
Gross profit		$     1,82,600.00
Selling and administrative expenses
Selling expenses	$    1,03,000.00
Administrative expenses'	$        41,000.00	$     1,44,000.00
Net income		$         38,600.00