The following data from the just completed year are taken from the accounting re

Question

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

Sales $ 656,000

Direct labor cost $ 82,000

Raw material

Purchases $ 139,000

Selling expenses $ 108,000

Administrative expenses $ 49,000

Manufacturing overhead applied to work in process $ 202,000 Actual manufacturing overhead costs $ 229,000

Inventories Beginning Ending Raw materials $ 8,600 $ 10,600

Work in process $ 5,400 $ 20,900 Finished goods $ 79,000 $ 25,500

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.

Explanation / Answer

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.

Beginning raw material 8600 Raw material purchase 139000 Raw material available for use 147600 Less: Ending raw material -10600 Direct material used 137000 Direct labour 82000 Manufacturing overhead applied 202000 Total manufacturing cost 421000 Beginning work in process 5400 Total cost of work in process 426400 Less: Ending work in process -20900 Cost of goods manufactured 405500

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