Question

The following data from the just completed year are taken from the accounting records of Mason Company:      Sales $ 654,000   Direct labor cost $ 86,000   Raw material purchases $ 138,000   Selling expenses $ 103,000   Administrative expenses $ 45,000   Manufacturing overhead applied to work in process $ 208,000   Actual manufacturing overhead costs $ 221,000       Inventories Beginning of Year End of Year   Raw materials $ 8,100     $ 10,600      Work in process $ 5,900     $ 20,900      Finished goods $ 77,000     $ 25,900    Required: 1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.

Mason Company Schedule of Cost of Goods Manufactured Direct materials: Beginning raw materials inventory $8,100 Add: Purchases of raw materials 138,000 Raw materials available for use 146,100 Less: Ending raw materials inventory 10,600 Raw materials used in production $135,500 Direct labor 86,000 Manufacturing overhead cost applied to work in process 208,000 Total manufacturing costs 429,500 Add: Beginning work in process inventory 5,900 435,400 Less: Ending work in process inventory 20,900 Cost of goods manufactured $414,500

2.	Prepare a schedule of cost of goods sold.

Mason Company Schedule of Cost of Goods Sold Beginning finished goods inventory $77,000 Add: Cost of goods manufactured 414,500 Goods available for sale 491,500 Less: Ending finished goods inventory 20,900 Unadjusted cost of goods sold 470,600 Less: Underapplied overhead Adjusted cost of goods sold $470,600

3.	Prepare an income statement. Mason Company Income Statement Sales Cost of goods sold Gross margin 0 Selling and administrative expenses: Administrative expense Selling expenses 0 Net operating income $0

Answer 1

Mason Company
Schedule of Cost of Goods Manufactured
Direct materials:
Beginning raw materials inventory	8100
Add: Purchases of raw materials	138,000
Raw materials available for use	146,100
Less: Ending raw materials inventory	10,600
Raw materials used in production		135500
Direct labor		86,000
Manufacturing overhead cost applied to work in process		208,000
Total manufacturing costs		429,500
Add: Beginning work in process inventory		5,900
		435,400
Less: Ending work in process inventory		20,900
Cost of goods manufactured		414,500
Mason Company
Schedule of Cost of Goods Sold
Beginning finished goods inventory	$77,000
Add: Cost of goods manufactured	414,500
Goods available for sale	491,500
Less: Ending finished goods inventory	25,900
Unadjusted cost of goods sold	465,600
Add: Underapplied overhead	13000
Adjusted cost of goods sold	$478,600
Mason Company
Income Statement
Sales		654000
Cost of goods sold		$478,600
Gross margin		$175,400
Selling and administrative expenses:
Administrative expense	45000
Selling expenses	103000
		148000
Net operating income		$27,400