Ask Question
3 February, 20:55

The following data from the just completed year are taken from the accounting records of Mason Company: Sales $ 656,000 Direct labor cost $ 89,000 Raw material purchases $ 137,000 Selling expenses $ 106,000 Administrative expenses $ 48,000 Manufacturing overhead applied to work in process $ 206,000 Actual manufacturing overhead costs $ 226,000 Inventories Beginning Ending Raw materials $ 8,200 $ 11,000 Work in process $ 5,600 $ 20,500 Finished goods $ 80,000 $ 25,800 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.

+1
Answers (1)
  1. 3 February, 21:14
    0
    Cost of Goods Manufactured $ 434,300

    Adjusted Cost of Goods Sold $ 488,500

    Operating Income $ 13,500

    Explanation:

    We do the following additions and subtractions to find the cost of goods manufactured.

    Mason Company:

    Schedule of Cost of Goods Manufactured

    Inventories Beginning Raw materials $ 8,200

    Add Raw material purchases $ 137,000

    Less Inventories Ending Raw materials $ 11,000

    Direct Materials Used $134,200

    Add Direct labor cost $ 89,000

    Add Actual manufacturing overhead costs $ 226,000

    Total Manufacturing Costs $449,200

    Add Inventories Beginning Work in process $ 5,600

    Cost of Goods Available for Manufacture 454,800

    Inventories Ending Work in process $ 20,500

    Cost of Goods Manufactured $ 434,300

    The cost of goods manufactured is again added and subtracted with finished goods inventories to prepare the schedule of cost of goods sold.

    Mason Company:

    Schedule of Cost of Goods Sold

    Inventories Beginning Raw materials $ 8,200

    Add Raw material purchases $ 137,000

    Less Inventories Ending Raw materials $ 11,000

    Direct Materials Used $134,200

    Add Direct labor cost $ 89,000

    Add Applied manufacturing overhead costs $ 206,000

    Total Manufacturing Costs $429,200

    Add Inventories Beginning Work in process $ 5,600

    Cost of Goods Available for Manufacture 434,800

    Inventories Ending Work in process $ 20,500

    Cost of Goods Manufactured $ 414,300

    Add Inventories Beginning Finished goods $ 80,000

    Cost of Goods Available for Sale $ 494,300

    Less Inventories Ending Finished goods $ 25,800

    Un adjusted Cost of Good Sold $ 468,500

    Add Under-applied Manufacturing Overhead 20,000

    Adjusted Cost of Goods Sold $ 488,500

    If we add the applied manufacturing overhead then the cost of goods sold is adjusted by adding the amount underapplied.

    Mason Company:

    Income Statement

    Sales $ 656,000

    Less Cost of Goods Sold $ 488,500 (as calculated above)

    Gross Profit $ 167,500

    Less Selling expenses $ 106,000

    Less Administrative expenses $ 48,000

    Operating Income $ 13,500
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The following data from the just completed year are taken from the accounting records of Mason Company: Sales $ 656,000 Direct labor cost $ ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers