The market price of a good equates the (marginal or total) cost of production and the (marginal or total) value that consumers attach to a unit of the good. Because the price also reflects the (production cost/opportunity cost/accounting cost) of the resources employed to produce the last unit, consumers will value the last unit until they purchase at least as much as they would value any other good that those resources could have produced. These characteristics of perfectly competitive markets guarantee (allocative or productive) efficiency.

The following cost and inventory data are taken from the accounting records of mason company for the year just completed: costs incurred: direct labor cost $ 90,000 purchases of raw materials $ 134,000 manufacturing overhead $ 205,000 advertising expense $ 45,000 sales salaries $ 101,000 depreciation, office equipment $ 225,000 beginning of the year end of the year inventories: raw materials $ 8,100 $ 10,300 work in process $ 5,900 $ 21,000 finished goods $ 77,000 $ 25,800 required: 1. prepare a schedule of cost of goods manufactured. 2. prepare the cost of goods sold section of mason company’s income statement for the year.