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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 $ 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.

Solutions

Expert Solution

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

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