The following data from the just completed year are taken from the accounting records of Mason Company: Sales$658,000 Direct labor cost$83,000 Raw material purchases$135,000 Selling expenses$106,000 Administrative expenses$46,000 Manufacturing overhead applied to work in process$202,000 Actual manufacturing overhead costs$224,000 Raw materials$8,800$10,200 Work in process$5,900$20,500 Finished goods$74,000$25,100 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. Prepare a schedule of cost of goods manufactured

schedule of cost of goods manufactured

Direct labor cost                                        $83,000

Raw Materials                                           $133,000

Manufacturing overhead                         $202,000

Add Beginning Work In Process                 $5,900

Less Ending  Work In Process                 ($20,500)

cost of goods manufactured                    $403,400

2. Prepare a schedule of cost of goods sold

schedule of cost of goods sold

Begining Finished goods                       $74,000

Add cost of goods manufactured        $403,400

Less Ending Finished goods                 ($25,100)

Add Under- Applied Overheads           $22,000

cost of goods sold                                $473,300

3. Prepare an income statement.

Sales                                                      $658,000

Less cost of goods sold                       ($473,300)

Gross Profit                                            $184,700

Less Operating Expenses

Selling expenses                                  ($106,000)

Administrative expenses                      ($46,000)

Net Income                                             $ 32,700

Explanation:

1. Prepare a schedule of cost of goods manufactured

Raw Materials Consumed in Production

Begining Raw Materials Inventory              $8,800

Add Raw material purchases                   $135,000

Less Ending Raw Materials Inventory      ($10,800)

Raw Materials Consumed in Production $133,000

schedule of cost of goods manufactured

Direct labor cost                                        $83,000

Raw Materials                                           $133,000

Manufacturing overhead                         $202,000

Add Beginning Work In Process                 $5,900

Less Ending  Work In Process                 ($20,500)

cost of goods manufactured                    $403,400

2. Prepare a schedule of cost of goods sold

Actual manufacturing overhead costs ($224,000) > Applied Manufacturing overhead($202,000)

Under- Applied Overheads

Applied Manufacturing overhead        $202,000

Actual manufacturing overhead costs $224,000

Under- Applied Overheads                    $22,000

schedule of cost of goods sold

Begining Finished goods                       $74,000

Add cost of goods manufactured        $403,400

Less Ending Finished goods                 ($25,100)

Add Under- Applied Overheads           $22,000

cost of goods sold                                $473,300

3. Prepare an income statement.

Sales                                                      $658,000

Less cost of goods sold                       ($473,300)

Gross Profit                                            $184,700

Less Operating Expenses

Selling expenses                                  ($106,000)

Administrative expenses                      ($46,000)

Net Income                                             $ 32,700