Externalities: A. are not reflected in market prices, so they can be a source of economic inefficiency. B. do become reflected in market prices, so they can be a source of economic inefficiency. C. are not reflected in market prices, so they do not adversely affect economic efficiency. D. do become reflected in market prices, so they do not adversely affect economic efficiency. E. may or may not become reflected in market prices, but do not have an impact on economic efficiency in either event.

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.