Question

17 Superior Company provided the following data for the year ended December 31. Superior closes any under-or over-applied overhead costs to cost of goods sold at the end of the year. Selling and administrative expense Sales Actual manufacturing overhead cost Total manufacturing cost for the year Cost of goods manufactured Direct labor cost Net operating income (after adjustment) Finished goods (beginning balance) Finished goods (ending balance) $ 12,000 $ 87,000 19.000 $ 45,000 $ 37,000 $ 10,000 S 42,000 $ 3,000 $ 15,000 What is the cost of direct materials used during the year? A. S 26,000 B. $ 24,000 C. S 10,000 DS 8,000 E. None of the above

Answer 1

Correct answer------------(B) $24,000

Working

Sales	$    87,000.00
Less: Cost of goods sold	$    33,000.00
Less: Selling and admi istrative expenses	$    12,000.00
Net operating income	$    42,000.00

.

Cost of goods manufactured	$        37,000.00
Plus: Beginning Finished goods Inventory	$          3,000.00
Less: Ending Finished goods Inventory	$        15,000.00
Unadjusted cost of goods sold	$        25,000.00
Underapplied overhead	$          8,000.00
Adjusted cost of goods sold	$        33,000.00

..

Total manufacturing cost	$    45,000.00
Less: Direct labor	$    10,000.00
Less: Overhead applied (19000-8000)	$    11,000.00
Equals Direct material cost	$    24,000.00