Answer:
Mason Company
a. A schedule of cost of goods manufactured:
Beginning inventory of raw materials $7,000
Purchases of raw materials $118,000
Less ending inventory of raw materials $15,000
Cost of raw materials used in production $110,00
Beginning Work in process $10,000
Cost of raw materials used $110,000
Direct labor costs $70,000
Manufacturing overhead $80,000
Total production cost $270,000
Ending work in process $5,000
Cost of goods manufactured $265,000
b. Cost of goods sold section of Mason Company's income statement for the year:
Beginning Finished goods inventory $20,000
Cost of goods produced $265,000
less ending finished goods inventory $35,000
Cost of goods sold $250,000
Explanation:
a) The cost of goods manufactured includes the beginning inventory of raw materials and Work in process, the purchase of raw materials during the period, direct labor costs and manufacturing overhead. Then the costs of ending inventory of raw materials and work in process are subtracted to get the cost of goods manufactured.
b) The cost of goods sold includes the cost of beginning inventory of finished goods and the cost of goods manufactured with the subtraction of the ending inventory of finished goods.
