Question

The following data from the just completed year are taken from the accounting records of Mason Company: Sales $ 654,000 Direct labor cost $ 88,000 Raw material purchases $ 135,000 Selling expenses $ 107,000 Administrative expenses $ 42,000 Manufacturing overhead applied to work in process $ 200,000 Actual manufacturing overhead costs $ 225,000 Inventories Beginning Ending Raw materials $ 8,800 $ 10,800 Work in process $ 6,000 $ 20,400 Finished goods $ 79,000 $ 25,000 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

Instructions are listed below

Step-by-step explanation:

Giving the following information:

Sales $ 654,000

Direct labor cost $ 88,000

Raw material purchases $ 135,000

Selling expenses $ 107,000

Administrative expenses $ 42,000

Manufacturing overhead applied to work in process $ 200,000

Actual manufacturing overhead costs $ 225,000

Inventories Beginning Raw materials $ 8,800

Ending inventories Raw materials $ 10,800

Beginning Work in process $ 6,000

Ending Work in process $ 20,400

Beginning Finished goods $ 79,000

Ending finished goods $ 25,000

1) cost of goods manufactured:

Beginning Work in process $ 6,000

Inventories Beginning Raw materials $ 8,800

Raw material purchases $ 135,000

Ending inventories Raw materials $ 10,800 (-)

Direct labor cost $ 88,000

Manufacturing overhead applied to work in process $ 200,000

Ending Work in process $ 20,400 (-)

Total= $406,600

2) Cost of goods sold:

Beginning Finished goods $ 79,000

cost of goods manufactured $406,600

Ending finished goods $ 25,000 (-)

Underapplied overhead= 25,000 (+)

Total COGS= $485,600

3) Income statement:

Sales= 654,000

COGS= 485,600

Gross income= $168,400

Selling expenses $ 107,000

Administrative expenses $ 42,000

Net operating income= $19,400