Question

Sales	$	652,000
Direct labor cost	$	86,000
Raw material purchases	$	136,000
Selling expenses	$	101,000
Administrative expenses	$	44,000
Manufacturing overhead applied to work in process	$	208,000
Actual manufacturing overhead costs	$	222,000

Inventories	Beginning		Ending
Raw materials	$	8,700	$	10,200
Work in process	$	5,800	$	20,900
Finished goods	$	74,000	$	25,800

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.

Mason Company Schedule of Cost of Goods Manufactured Direct materials: Beginning raw materials inventory Add: Purchases of raw materials Total raw materials available Less: Ending raw materials inventory Raw materials used in production Direct labor Manufacturing overhead Total manufacturing costs Add: Beginning work in process inventory 0 Less: Ending work in process inventory Cost of goods manufactured

	Mason Company Schedule of Cost of Goods Sold Beginning finished goods inventory Add: Cost of goods manufactured Cost of goods available for sale Less: Ending finished goods inventory Adjusted cost of goods sold Less: Underapplied overhead Adjusted cost of goods sold

Prepare an income statement.

	Mason Company Income Statement 0 Selling and administrative expenses: 0 $0

Answer 1

1.

Mason Company
Schedule of cost of goods manufactured
Direct Meterial
Beginning raw meterial inventory	$      8,700
Add: Purchase of raw meterial	$ 136,000
Raw meterials available for production	$ 144,700
Less: Ending raw meterial inventory	$    10,200
Raw material used in production		$ 134,500
Direct labour		$    86,000
Manufacturing overhead applied to work in process inventory		$ 208,000
Total Manufactoring Cost		$ 428,500
Add:Beginning work in progress inventory		$      5,800
Total cost of work in process		$ 434,300
Less: Ending work in progress inventory		$    20,900
Cost of goods manufactured		$ 413,400

2.

Mason Company
Schedule of cost of goods sold
Finished goods inventory, beginning	$    74,000
Add: Cost of goods manufactured	$ 413,400
Goods available for sale	$ 487,400
Less: Finished goods inventory, ending	$    25,800
Unadjusted cost of goods sold	$ 461,600
Add: Underapplied overhead ($222,000-$208,000)	$    14,000
Adjusted cost of goods sold	$ 475,600

3.

Mason Company
Income Statement
Sales		$ 652,000
Less: Cost of goods sold		$ 475,600
Gross profit		$ 176,400
Selling and administrative expenses
Selling expense	$ 101,000
Administrative expense	$    44,000	$ 145,000
Net income		$    31,400

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