The following data from the just completed year are taken from the accounting records of Mason Company:

Sales	$	654,000
Direct labor cost	$	86,000
Raw material purchases	$	138,000
Selling expenses	$	103,000
Administrative expenses	$	45,000
Manufacturing overhead applied to work in process	$	208,000
Actual manufacturing overhead costs	$	221,000

Inventories	Beginning of Year		End of Year
Raw materials	$	8,100	$	10,600
Work in process	$	5,900	$	20,900
Finished goods	$	77,000	$	25,900

Required:

1.	Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.

Mason Company
Schedule of Cost of Goods Manufactured
Direct materials:
Beginning raw materials inventory	$8,100
Add: Purchases of raw materials	138,000
Raw materials available for use	146,100
Less: Ending raw materials inventory	10,600
Raw materials used in production		$135,500
Direct labor		86,000
Manufacturing overhead cost applied to work in process		208,000
Total manufacturing costs		429,500
Add: Beginning work in process inventory		5,900
		435,400
Less: Ending work in process inventory		20,900
Cost of goods manufactured		$414,500

2.	Prepare a schedule of cost of goods sold.

Mason Company
Schedule of Cost of Goods Sold
Beginning finished goods inventory	$77,000
Add: Cost of goods manufactured	414,500
Goods available for sale	491,500
Less: Ending finished goods inventory	20,900
Unadjusted cost of goods sold	470,600
Less: Underapplied overhead
Adjusted cost of goods sold	$470,600

3.

Prepare an income statement.

Mason Company
Income Statement
Sales
Cost of goods sold
Gross margin		0
Selling and administrative expenses:
Administrative expense
Selling expenses
		0
Net operating income		$0