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 $ 652,600 $ 86,999 $ 134,000 $ 101,000 $ 47,000 $ 209,000 $ 223, eee Inventories Raw materials Work in process Finished goods Beginning $ 8,709 $ 6,000 $ 71,000 Ending $ 10,400 $ 20,200 $ 25,900 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 Costo Goods Sold 3. Prepare an income statement.

Answer 1

Mason Company
Schedule of cost of goods manufactured
Direct Materials:
Beginning Raw materials	$8,700
Add:Purchase of raw materials	$134,000
Total Raw materials available	$142,700
Less:Ending raw materials inventory	$10,400
Raw materials used in production		$132,300
Direct Labor		$86,000
Manufacturing OH applied to WIP		$209,000
Total manufaturing costs		$427,300
Add:Beginning WIP inventory		$6,000
		$433,300
Less:Ending WIP inventory		$20,200
Cost of goods manufactured		$413,100
Mason Company
Schedule of cost of goods sold
Beginning Finished goods inventory	$71,000
Add:Cost of goods manufactured	$413,100
Cost of goods available for sale	$484,100
Less:Finished goods inventory	$25,900
Unadjusted cost of goods sold	$458,200
Add:Under-applied overheads	$14,000	($223,000-209,000)
Adjusted cost of goods sold	$472,200
Mason Company
Income Statement
Sales		$652,000
Less:Cost of goods sold		$472,200
Gross Margin		$179,800
Less:Selling and admin expenses:
Selling expense	$101,000
Administrative expense	$47,000	$148,000
Net operating income		$31,800