1 answer

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

Question:

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

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 $ 651,000 $ 88,000 $ 134,000 $ 105,000 $ 43,000 $ 205,000 $ 221,000 Inventories Raw materials Work in process Finished goods Beginning $ 8,800 $ 5,400 $ 74,000 Ending $ 10,100 $ 20,500 $ 25, 200 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.

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Mason Company
Schedule of Cost of goods Manufactured
Direct Materials
Raw Material Inventory beginning $         8,800
Add: Purchases of raw Material $   1,34,000
Total Raw Material available $   1,42,800
Less: Raw Material Inventory ending $       10,100
Raw Material used in production $   1,32,700
Direct Labor $       88,000
Manufacturing overhead $   2,05,000
Total manufacturing cost $   4,25,700
Add: Beginning work in process inventory $         5,400
$   4,31,100
Less: Ending work in process inventory $       20,500
Cost of goods manufactured $   4,10,600
Mason Company
Schedule of Cost of Goods Sold
Finished Goods Inventory Beginning $       74,000
Add: Cost of goods manufactured $   4,10,600
Cost of goods available for sale $   4,84,600
Less: Finished Goods Inventory Ending $       25,200
Unadjusted cost of goods sold $   4,59,400
Add: Underapplied Overheads $       16,000
Adjusted cost of goods sold $   4,75,400
Workings:
2 Underapplied Overheads = Actual Manufacturing overheads - Manufacturing overheads applied
Underapplied Overheads = $221000 - $2,05,000 = $16,000
Mason Company
Income Statement
Sales $   6,51,000
Less: Cost of Goods Sold $   4,75,400
Gross Margin $   1,75,600
Less: Selling and Administrative Expenses:
Selling Expense $   1,05,000
Administrative Expense $       43,000 $   1,48,000
Net Operating Income $       27,600
.

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