Question

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

Costs incurred:
Direct labor cost ................................................... $70,000
Purchases of raw materials .................................. $118,000
Manufacturing overhead ...................................... $80,000
Advertising expense ............................................. $90,000
Sales salaries ....................................................... $50,000
Depreciation, office equipment ............................ $3,000

Beginning of the year End of the year
  
Inventories:
Raw materials ............................ $7,000 $15,000
Work in process .......................... $10,000 $5,000
Finished goods ............................ $20,000 $35,000

1. Prepare a schedule of cost of goods manufactured.

2. Prepare a schedule of cost of goods sold

Answer 1

1		Manson Company
		Schedule of Cost of Goods Manufactured
				$	$
	Direct Materials :
	Raw Material inventory, Beginning			7,000
	Add : Purchases of Raw Material			118,000
	Raw Material Available for use			125,000
	Deduct : Raw Material inventory , Ending			15,000
	Raw Material Used in Production				110,000
	Direct Labor				70,000
	Manufacturing Overhead				80,000
	Total Manufaturing Cost				260,000
	Add : Beginning Work in process Inventory				10,000
					270,000
	Deduct : Ending Work in process Inventory				5,000
	Cost of Goods Manufactured				265,000
2		Manson Company
		Schedule of Cost of Goods Sold
					$
	Beginning Finished Goods Inventory				20,000
	Add : Cost of Goods Manufactured				265,000
	Goods Available for Sales				285,000
	Deduct : Ending Finished Goods Inventory				35,000
	Cost of Goods Sold				250,000