Question

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

Sales $656,000
Direct labor cost $80,000
Raw material purchases $135,000
Selling expenses $105,000
Administrative expenses $41,000
Manufacturing overhead
applied to work in process $201,000
Actual manufacturing
overhead costs $222,000

Required:
a. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.
b. Prepare a schedule of cost of goods sold. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold.
c. Prepare an income statement.

Answer 1

Mason Company

a) Schedule of Cost of Goods Manufactured:

Direct labor cost $80,000

Raw material purchases $135,000

Manufacturing overhead

applied to work in process $201,000

Cost of goods manufactured $416,000

b) Schedule of Cost of Goods Sold:

Cost of goods manufactured $416,000

Under-applied overhead 21,000

Cost of goods sold $437,000

c) Income Statement:

Sales $656,000

Cost of goods sold $437,000

Gross profit $219,000

Selling expenses $105,000

Administrative expenses $41,000

Total expenses $146,000

Net income $73,000

Step-by-step explanation:

a) Data and Calculations:

Sales $656,000

Direct labor cost $80,000

Raw material purchases $135,000

Selling expenses $105,000

Administrative expenses $41,000

Manufacturing overhead

applied to work in process $201,000

Actual manufacturing

overhead costs $222,000

Under-applied overhead $21,000 ($222,000 - $201,000)