Question

Problem 3-13 Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement [LO3-3]

Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials):

Selling expenses	$	215,000
Purchases of raw materials	$	264,000
Direct labor		?
Administrative expenses	$	153,000
Manufacturing overhead applied to work in process	$	373,000
Actual manufacturing overhead cost	$	353,000

Inventory balances at the beginning and end of the year were as follows:

	Beginning of Year			End of Year
Raw materials	$	50,000		$	39,000
Work in process		?		$	24,000
Finished goods	$	36,000			?

The total manufacturing costs for the year were $675,000; the cost of goods available for sale totaled $730,000; the unadjusted cost of goods sold totaled $665,000; and the net operating income was $39,000. The company’s underapplied or overapplied overhead is closed to Cost of Goods Sold.

Required:

Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet. For detailed answer refer to the supporting sheet.

Answer Part 1) Suprerior Company Income Statement For the year ended December 31 5 Sales (645000+407000) Cost of goods sold (665000-20000) Gross Margin (368000+39000) Less Selling expenses 1 Adminstrative expense 1052000 645000 407000 215000 153000 368000 39000 3 Net Income 5 Part 2) Suprerior Company Statement of cost of goods sold For the year ended December 31 ? Beginning finished Goods Cost of goods manufactured (730000-36000) 1 Total goods available for sale 2 Less Ending inventory (730000-665000) 3 Unadjusted cost of goods sold 4 Less Overapplied overheads (373000-353000) 5 Adjusted Cost of goods sold 36000 694000 730000 65000 665000 20000 645000

27 Part 3) 28 Suprerior Company 29 Cost of goods manufactured 30 For the year ended December 31 31 Direct Material Used 32 Beginning inventory 33 Purchases 34 Total raw material available for use 35 Less ending inventory 36 Direct Labour (675000-275000-373000) 37 Manufacturing overheads applied 38 Total manufacturing cost 39 Beginning work in process (718000-675000) 40 41 Less ending work in process 42 Cost of goods manufactured 43 50000 264000 314000 39000 275000 27000 373000 675000 43000 718000 24000 694000