Mason Company's schedule of cost of goods manufactured is as follows: Costs incurred:
Direct labor cost $70,000
Purchases of raw materials $118,000
Manufacturing overhead $80,000
Advertising expense $90,000
Sales salaries $50,000
Depreciation, office equipment $3,000

Beginning of year End of the year
Inventories:
Raw materials $7,000 $15,000
Work in process $10,000 $5,000
Finished goods $20,000 $35,000

Required:
a. Prepare a schedule of cost of goods manufactured.
b. Prepare the cost of goods sold section of Mason Company's income statement for the year.

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.

answer; ///the correct answer is (ftc) federal trade commission;

i might look it up later.