Question

The following data from the just completed year are taken from the accounting records of Mason Company: Sales$657,000 Direct labor cost$84,000 Raw material purchases$131,000 Selling expenses$107,000 Administrative expenses$46,000 Manufacturing overhead applied to work in process$203,000 Actual manufacturing overhead costs$229,000 InventoriesBeginningEnding Raw materials$8,000$10,000 Work in process$5,300$21,000 Finished goods$78,000$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 Cost of Goods Sold. 3. Prepare an income statement.

Answer 1

Cost Of Goods Manufactured $ 426,300

Adjusted Cost Of Goods Sold $ 478,400

Gross Profit $178,600

Net Profit $ 25,600

Step-by-step explanation:

A schedule of cost of goods manufactured, a schedule of Cost of Goods Sold and an income statement require the same steps.

Beginning with raw materials inventories we add and subtract as given below.

Mason Company:

Cost Of Goods Manufactured Statement

Inventories Beginning Raw materials $ 8,000

Add Raw material purchases $ 131,000

Less Inventories Ending Raw materials $10,000

Direct Materials Used $ 129,000

Direct labor cost $84,000

Actual manufacturing overhead costs $ 229,000

Total Manufacturing Costs $ 442,000

Add Inventories Beginning Work in process $5,300

Cost Of Goods Available For Manufacture $ 447,300

Less Inventories Ending Work in process $21,000

Cost Of Goods Manufactured $ 426,300

Mason Company:

Cost OF Goods Sold Statement

Inventories Beginning Raw materials $ 8,000

Add Raw material purchases $ 131,000

Less Inventories Ending Raw materials $10,000

Direct Materials Used $ 129,000

Direct labor cost $84,000

Applied manufacturing overhead costs $ 203,000

Total Manufacturing Costs $ 416,000

Add Inventories Beginning Work in process $5,300

Cost Of Goods Available For Manufacture $ 421,300

Less Inventories Ending Work in process $21,000

Cost Of Goods Available For Manufactured $ 400,300

Add Inventories Beginning Finished goods $78,000

Cost Of Goods Available For Sale $ 478,300

Less Inventories Ending Finished goods $25,900

Cost Of Goods Sold before Adjustment $ 452,400

Add Under applied Manufacturing Overhead $ 26000

Adjusted Cost Of Goods Sold $ 478,400

Mason Company:

Income Statement

Sales $ 657,000

Inventories Beginning Raw materials $ 8,000

Add Raw material purchases $ 131,000

Less Inventories Ending Raw materials $10,000

Direct Materials Used $ 129,000

Direct labor cost $84,000

Actual manufacturing overhead costs $ 229,000

Total Manufacturing Costs $ 442,000

Add Inventories Beginning Work in process $5,300

Cost Of Goods Available For Manufacture $ 447,300

Less Inventories Ending Work in process $21,000

Cost Of Goods Available For Manufactured $ 426,300

Add Inventories Beginning Finished goods $78,000

Cost Of Goods Available For Sale $ 504,300

Less Inventories Ending Finished goods $25,900

Cost Of Goods Sold ($ 478,400)

Gross Profit $178,600

Less Selling expenses $ 107,000

Less Administrative expenses $ 46,000 $ ( 153,000)

Net Profit $ 25,600