Should any overhead cost be added to Job W at year-end? If so, how much? Explain
ID: 2611280 • Letter: S
Question
Should any overhead cost be added to Job W at year-end? If so, how much? Explain. EXERCISE 2-11 Schedules of Cost of Goods Manufactuted and Cost of Goods Sold; Income Statement [LO2-6 The following data from the just completed year are taken from the accounting Ending raw material inventory = $8,000; Ending work in process records of Mason Company: Sales inventory Direct labor cost $524,000 $70,000 $16,000 Raw material purchases Selling expenses Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead costs $140,000 $63,000 $90,000 $80,000 . . . . Beginning ot End of Inventories Raw materials.... Work in process . $7,000 $10,000 $20,000 Year $15,000 $5,000 $35,000 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 3. Prepare an income statement, Page 105Explanation / Answer
Mason Company
Schedule of Cost of Goods Manufactured
Direct Materials:
Beginning raw materials inventory
$7000
Add: purchase of raw materials
118000
Raw materials available for use
125000
Less: ending raw materials inventory
15000
Raw materials used in production
110000
Direct Labor
70000
Manufacturing overhead
80000
Total manufacturing cost
260000
Add: beginning work in process in inventory
10000
270000
Less: Ending work in process inventory
5000
Cost of goods manufactured
265000
Prepare the cost of goods sold
Beginning finished goods inventory
$20000
Add : Cost of goods manufactured
265000
Goods available for sale
285000
Deduct : Ending finished goods inventory
35000
Cost of goods sold
250000
Income Statement
Sales
$524000
Cost of goods Sold
250000
Gross margin
274000
Selling & Administrative Expenses:
Selling Expenses
140000
Administrative Expenses
63000
203000
Net operating income
$71000
Direct Materials:
Beginning raw materials inventory
$7000
Add: purchase of raw materials
118000
Raw materials available for use
125000
Less: ending raw materials inventory
15000
Raw materials used in production
110000
Direct Labor
70000
Manufacturing overhead
80000
Total manufacturing cost
260000
Add: beginning work in process in inventory
10000
270000
Less: Ending work in process inventory
5000
Cost of goods manufactured
265000