The following data from the just completed year are taken from the accounting re
ID: 2332180 • Letter: T
Question
The following data from the just completed year are taken from the accounting records of Mason Company:
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.
The following data from the just completed year are taken from the accounting records of Mason Company:
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.
Sales $ 524,000 Direct labor cost $ 70,000 Raw material purchases $ 118,000 Selling expenses $ 140,000 Administrative expenses $ 63,000 Manufacturing overhead applied to work in process $ 90,000 Actual manufacturing overhead costs $ 80,000Explanation / Answer
Part 1
Schedule of Cost of Goods Manufactured
Beginning raw materials inventory................. $ 7,000
Add: Raw material Purchases........................ 118,000
Less: Indirect materials...................................... 0
Less: Ending raw materials inventory.................(15,000)
Direct Materials Used............................................110,000
Add:Direct Labor........................................... ....... 70,000
Add: Manufacturing OH applied........... .......... ..... 90,000
Total current manufacturing costs........................ 270,000
Add: Beginning WIP Inventory.............................. 10,000
Less: Ending WIP Inventory................................... (5,000)
Cost of Goods Manufactured............................. $ 275,000
Part 2. schedule of cost of goods sold
Beginning Finished goods Inventory................... 20,000
Add: Cost of Goods Manufactured..................... 275,000
Cost of Goods available...................................... 295,000
Less: Ending Finished goods inventory............. (35,000)
Unadjusted cost of goods sold............ ....... ..... 260,000
Less: Overapplied Manufacturing overhead...... (10,000)
Adjusted Cost of goods sold.................................. 250,000
Overapplied Manufacturing overhead = Actual manufacturing overhead costs - Manufacturing overhead applied to work in process = 80000-90000
Part 3 Income Statement
Mason Company
Income statement
Sales Revenue....................... ........ ........ $ 524,000
Less: cost of goods sold........................... 250,000
Gross Profit................................................. 274,000
Less: Selling Expenses............................... 140,000
Less: Administrative Expenses.................... 63,000
Net income....................................................$ 71,000
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