### Requireda. What was Mason’s Cost of Goods Manufactured for the month of August?b. What was the balance in WIP Inventory at the end of August?c. Was MOH under- or overapplied for the month of August? What effect does this have on any balances in WIP Inventory and FG Inventory on the balance sheet? What effect does this have on COGS on the income statement? In its job costing system, Mason Co. applies Manufacturing Overhead (MOH) to jobs using a budgeted MOH rate based on Direct Labor (DL) dollars. The rate, which is 200% of DL dollars, was calculated last December and will be used throughout the current year. On August 1, Mason had one job, #150, in process, with Direct Materials (DM) costs of $2,000 and DL costs of $3,000.During August, DM and DL costs were added to Job #150, as well as new Jobs #151 and #152, as follows:| | Job #150 | Job #151 | Job #152 ||---------------|----------|----------|----------|| Direct materials | $0 | $4,000 | $1,000 || Direct labor | $1,500 | $5,000 | $2,500 |The actual MOH cost for the month of August was $20,000. During the month, Mason completed Jobs #150 and #151.

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Description: ### Requireda. What was Mason’s Cost of Goods Manufactured for the month of August?b. What was the balance in WIP Inventory at the end of August?c. Was MOH under- or overapplied for the month of August? What effect does this have on any balances in

Manufacturing overhead means the cost which has been incurred in factory and indirectly related with production. Some manufacturing overhead can be fixed and other remain variable. Answer a :- Job No. 150 and 151 , jobs completed Opening work in progress (2000+3000+3000*200%) = 11,000 Direct material = 4,000 Direct labour (1500+5000) = 6,500 Manufacturing overhead absorbed (6500*200%) = 13,000 Total cost of goods manufactured = 34,500 Answer b :- Job No. 152 (Ending work in progress inventory) Direct material = 1,000 Direct labour = 2,500 Manufacturing overhead absorbed (2500*200%) = 5,000 Total cost of ending WIP inventory = 8,500 Answer c :- Actual manufacturing overhead incurred = 20,000 Manufacturing overhead absorbed (13000+5000) = 18,000 Manufacturing overhead under absorbed = 2,000 Since the manufacturing overhead has been under absorbed in this question by $ 2,000 it means that the value of WIP and finished goods inventory has been on lower side i.e. balance of WIP and finished goods inventory has been shown at reduced value in balance sheet. Since no goods has been sold out this period , it means that no value is assigned to the cost of goods sold on income statement. It means that Cost of goods sold has nil value hence, no effect on that.

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Required a. What was Mason's Cost of Goods Manufactured for the month of August? b. What was the balance in WIP Inventory at the end of August? c. Was MOH under- or overapplied for the month of August? What effect does this have on any bal- ances in WIP Inventory and FG Inventory on the balance sheet? What effect does this have on COGS on the income statement?

Required a. What was Mason's Cost of Goods Manufactured for the month of August? b. What was the balance in WIP Inventory at the end of August? c. Was MOH under- or overapplied for the month of August? What effect does this have on any bal- ances in WIP Inventory and FG Inventory on the balance sheet? What effect does this have on COGS on the income statement?

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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### Required

a. What was Mason’s Cost of Goods Manufactured for the month of August?

b. What was the balance in WIP Inventory at the end of August?

c. Was MOH under- or overapplied for the month of August? What effect does this have on any balances in WIP Inventory and FG Inventory on the balance sheet? What effect does this have on COGS on the income statement?

In its job costing system, Mason Co. applies Manufacturing Overhead (MOH) to jobs using a budgeted MOH rate based on Direct Labor (DL) dollars. The rate, which is 200% of DL dollars, was calculated last December and will be used throughout the current year. On August 1, Mason had one job, #150, in process, with Direct Materials (DM) costs of $2,000 and DL costs of $3,000.

During August, DM and DL costs were added to Job #150, as well as new Jobs #151 and #152, as follows:

| | Job #150 | Job #151 | Job #152 |
|---------------|----------|----------|----------|
| Direct materials | $0 | $4,000 | $1,000 |
| Direct labor | $1,500 | $5,000 | $2,500 |

The actual MOH cost for the month of August was $20,000. During the month, Mason completed Jobs #150 and #151.

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