Exercise 3-6 Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Inc

Question

Exercise 3-6 Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement [LO3-3] The following data from the just completed year are taken from the accounting records of Mason Company: Sales Direct labor cost Raw material purchases Selling expenses Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead costs 651,000 $ 90,000 131,000 $ 105, 000 $ 49,000 201,000 226,000 Inventories Raw materials Work in process Finished goods Beginning Ending $8,800 $ 10,800 $5,100 20,700 $77,000 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. Complete this question by entering your answers in the tabs below

Explanation / Answer

Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning 8800 Add: Purchases of raw materials 131000 Total raw materials available 139800 Deduct: Raw materials inventory, ending 10800 Raw materials used in production 129000 Direct labor 90000 Manufacturing overhead applied to work in process inventory 201000 Total manufacturing costs 420000 Add: Beginning work in process inventory 5100 425100 Deduct: Ending work in process inventory 20700 Cost of goods manufactured 404400 Schedule of Cost of Goods Sold Finished goods inventory, beginning 77000 Add: Cost of goods manufactured 404400 Cost of goods available for sale 481400 Deduct: Finished goods inventory, ending 25500 Unadjusted cost of goods sold 455900 Add: Underapplied overhead 25000 =226000-201000 Adjusted cost of goods sold 480900 Income Statement Sales 651000 Cost of goods sold 480900 Gross margin . 170100 Selling and administrative expenses: Selling expenses 105000 Administrative expense 49000 154000 Net operating income 16100

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