The following data from the just completed year are taken from the accounting records of Mason Company: Sales $ 654,000 Direct labor cost $ 88,000 Raw material purchases $ 135,000 Selling expenses $ 107,000 Administrative expenses $ 42,000 Manufacturing overhead applied to work in process $ 200,000 Actual manufacturing overhead costs $ 225,000 Inventories Beginning Ending Raw materials $ 8,800 $ 10,800 Work in process $ 6,000 $ 20,400 Finished goods $ 79,000 $ 25,000 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.

Instructions are listed below

Explanation:

Giving the following information:

Sales $ 654,000

Direct labor cost $ 88,000

Raw material purchases $ 135,000

Selling expenses $ 107,000

Administrative expenses $ 42,000

Manufacturing overhead applied to work in process $ 200,000

Actual manufacturing overhead costs $ 225,000

Inventories Beginning Raw materials $ 8,800

Ending inventories Raw materials $ 10,800

Beginning Work in process $ 6,000

Ending Work in process $ 20,400

Beginning Finished goods $ 79,000

Ending finished goods $ 25,000

1) cost of goods manufactured:

Beginning Work in process $ 6,000

Inventories Beginning Raw materials $ 8,800

Raw material purchases $ 135,000

Ending inventories Raw materials $ 10,800 (-)

Direct labor cost $ 88,000

Manufacturing overhead applied to work in process $ 200,000

Ending Work in process $ 20,400 (-)

Total = $406,600

2) Cost of goods sold:

Beginning Finished goods $ 79,000

cost of goods manufactured $406,600

Ending finished goods $ 25,000 (-)

Underapplied overhead = 25,000 (+)

Total COGS = $485,600

3) Income statement:

Sales = 654,000

COGS = 485,600

Gross income = $168,400

Selling expenses $ 107,000

Administrative expenses $ 42,000

Net operating income = $19,400