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): $ 220,000 $ 269,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 158,000 $ 370,000 $ 359,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning of Year End of Year $ 57,000 $ 39,000 ? $ 25,000 $ 38,000

Answer 1

SUPERIOR COMPANY Income Statement Sales Less: adjusted Cost of Goods Sold Gross Margin Selling and administrative Expenses Selling Expenses $ Administrative Expenses $ $ $ $ 1,063,000 650,000 413,000 220,000 158,000 $ $ 378,000 35,000 Net Operative Income SUPERIOR COMPANY Schedule Cost of goods Sold Finished goods inventory, beginning $ 38,000 Add: Cost of Goods manufactured S 697,000 Cost of goods available for sale $ 735,000 Less: Finished goods inventory, ending S 74,000 Unadjusted cost of goods sold $ 661,000 Less: Over applied overhead $ 11,000 Adjusted Cost of goods sold S 650,000 Note : Over Applied Overhead =Manufacturing overhead applied to work in process - Actual manufacturing overhaed cost = $370,000-$359,000 = $11,000

SUPERIOR COMPANY Schedule Cost of goods Manufactured Schedule Direct Material : Raw Material inventory Beginning $ 57,000 Add: Raw materials purchases $ 269,000 Raw materials available $ 326,000 Less: Raw materials inventory Ending $ 39,000 Raw Materials used in production Direct Labour Manufacturing overhead applied to work in Process Total Manufacturing Costs Add: Work in process inventory Beginning Less: work in process inventory Ending Cost of goods Manufactured $ $ 287,000 18,000 370,000 675,000 47,000 25,000 697,000