Question

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

Sales	$	655,000
Direct labor cost	$	82,000
Raw material purchases	$	134,000
Selling expenses	$	103,000
Administrative expenses	$	45,000
Manufacturing overhead applied to work in process	$	206,000
Actual manufacturing overhead costs	$	226,000

   

Inventories	Beginning of Year		End of Year
Raw materials	$	8,500	$	10,300
Work in process	$	5,500	$	20,800
Finished goods	$	79,000	$	25,500

   

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.

          

3.	Prepare an income statement.

      

Answer 1

1) Schedule of Cost of goods manufactured

Direct material
Beginning raw material	8500
Raw material purchase	134000
Raw material available for use	142500
Less: Ending material	-10300
Direct material used		132200
Direct labor		82000
Manufacturing overhead		206000
Total manufacturing cost		420200
Beginning work in process		5500
Total cost of work in process		425700
Less; Ending work in process		-20800
Cost of goods manufactured		404900

Schedule of cost of goods sold

Beginning finished goods	79000
Cost of goods manufactured	404900
Cost of goods available for sale	483900
Less: Ending finished goods	-25500
Unadjusted cost of goods sold	458400
Add: Under applied overhead	20000
Adjusted cost of goods sold	478400

Income statement

Sales		655000
Cost of goods sold		478400
Gross profit		176600
Less: Operating expense
Selling expense	103000
Administrative expense	45000
Total operating expense		148000
Operating income		28600