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Accounting Managerial: Cost of Goods Manufactured and Sold

Preparation of a Schedule of Cost of Goods Manufactured and Cost of Goods Sold [LO1, LO3, LO4] The following cost and inventory data are taken from the accounting records of Mason Company for the year just completed:

Costs incurred:
Direct labor cost $70,000
Purchases of raw materials $118,000
Indirect labor $30,000
Maintenance, factory equipment $6,000
Advertising expense $90,000
Insurance, factory equipment $800
Sales salaries $50,000
Rent, factory facilities $20,000
Supplies $4,200
Depreciation, office equipment $3,000
Depreciation, factory equipment $19,000
Beginning of Year End of Year
Inventories:
Raw materials $7,000 $15,000
Work in process $10,000 $5,000
Finished goods $20,000 $35,000

Required:

Prepare a schedule of cost of goods manufactured in good form.
Prepare the cost of goods sold section of Mason Company's income statement for the year.
1. MASON COMPANY
Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials inventory, beginning $7,000
Add: Purchases of raw materials ____________

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Raw materials available for use ____________
Deduct: Raw materials inventory, ending 15,000

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Raw materials used in production $ ____________
Direct labor ____________
Manufacturing overhead:
Indirect labor 30,000
Maintenance, factory equipment ____________
Insurance, factory equipment ____________
Rent, factory facilities ____________
Supplies 4,200
Depreciation, factory equipment 19,000

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Total overhead costs ____________

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Total manufacturing costs ____________
Add: Work in process, beginning 10,000

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____________
Deduct: Work in process, ending 5,000

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Cost of goods manufactured $ ____________

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2. The cost of goods sold section of Mason Company's income statement:
Finished goods inventory, beginning $20,000
Add: Cost of goods manufactured ____________

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Goods available for sale ____________
Deduct: Finished goods inventory, ending 35,000

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Cost of goods sold $ ____________

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Solution Preview

Preparation of a Schedule of Cost of Goods Manufactured and Cost of Goods Sold [LO1, LO3, LO4] The following cost and inventory data are taken from the accounting records of Mason Company for the year just completed:

Costs incurred:
Direct labor cost $70,000
Purchases of raw materials $118,000
Indirect labor $30,000
Maintenance, factory equipment $6,000
Advertising expense $90,000
Insurance, factory equipment $800
Sales salaries $50,000
Rent, factory facilities $20,000
Supplies $4,200
Depreciation, office equipment $3,000
Depreciation, factory equipment $19,000
Beginning of Year End of Year
Inventories:
Raw materials $7,000 $15,000
Work in process $10,000 $5,000
Finished goods ...

Solution Summary

This explains the steps to prepare the cost of goods sold section

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