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 Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 210,000 $ 265,000 ? $ 159,000 $ 372,000 $ 353,000 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 $ 53,000 $ 39,000 ? $ 27,000 $ 36,000 The total manufacturing costs for the year were $680,000; the cost of goods available for sale totaled $735,000; the unadjusted cost of goods sold totaled $667,000; and the net operating income was $32,000. 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

Schedule of Cost of Goods Manufactured
Direct Materials:
Raw Materials inventory,beginning					53,000
Add:purchases of raw materials					265,000
total raw materials available					318,000
Deduct:Raw materials inventory ,ending					39,000
Raw Materials used in production						279,000
Direct Labor						29,000
Manufacturing overhead Applied to WIP						372,000
total manufacturing costs						680,000
Add:Beginning work in process inventory						46,000
						726,000
Deduct:Ending work in process inventory						27,000
Cost of goods manufactured						699,000
Schedule of Cost of Goods sold
Finished goods inventory,beginning						36,000
Add:Cost of goods manuactured						699,000
Cost of goods available for sale						735,000
Deduct:Finished goods inventory,ending						68,000
Unadjusted cost of goods sold						667,000
less::overapplied overhead						19000
Adjusted cost of goods sold						648,000
Income statement
Sales						1,049,000
cost of good sold						648,000
Gross margin						401,000
Selling and administrative expense
Selling expenses					210,000
Administrative expense					159,000	369,000
Net operating income						32,000