Question

The following data from the just completed year are taken from the accounting records of Mason Company: Sales Direct labor cost Raw material purchases Selling expenses Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead costs $ 660,000 $ 89,000 $ 132,000 $ 103,000 $ 43,000 $ 204,000 $ 227,000 Inventories Raw materials Work in process Finished goods Beginning $ 8,100 $ 5,700 $ 75,000 Ending $ 10,600 $ 20,700 $25,700 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.

Answer 1

1.

Cost of Goods Manufactured Schedule
Direct Materials
Raw Material Inventory		$                  8,100
Raw Material Purchases		$              132,000
Total Raw Material available for use		$              140,100
Less : Raw Material Inventory		$                10,600
Direct Material Used in production			$                      129,500
Direct Labor			$                         89,000
Manufacturing Overhead applied			$                      204,000
Total Manufacturing Costs			$                      422,500
Beginning Work in process inventory			$                           5,700
			$                      428,200
Less: Ending Work in Process inventory			$                         20,700
Cost of goods manufactured			$                      407,500

2.

Cost of Goods Sold
Beginning Finsihed Goods Inventory		$          75,000.00
Add : Cost of Goods manufactured		$        407,500.00
Cost of Goods Available for sale		$        482,500.00
Less : Ending Finsihed Goods Inventory		$          25,700.00
Unadjusted Cost of Goods Sold		$        456,800.00
Under-/Overapplied Overhead		$          23,000.00	=227000-204000
Adjusted Cost of Goods Sold		$        479,800.00

3.

Income Statement
Sales Revenue		$        660,000.00
Less Cost of Goods Sold		$        479,800.00
Gross Profit		$        180,200.00
Operating Expenses
Selling Expense	$        103,000.00
Administrative Expenses	$          43,000.00
Total Operating Expenses		$        146,000.00
Net Income		$          34,200.00