Should any overhead cost be added to Job W at yearend If so

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 105

Solution

                              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