Question

Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): $ 213,000 $ 262,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 160,000 $ 374,000 $ 359,000 Inventory balances at the beginning and end of the year were as follows: Beginning of Year $ 51,000 ? $ 36,000 End of Year $ 39,000 $ 27,000 Raw materials Work in process Finished goods The total manufacturing costs for the year were $680,000; the cost of goods available for sale totaled $750,000; the unadjusted cost of goods sold totaled $667,000; and the net operating income was $35,000. 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

Income statement

Sales revenue		1109000
Cost of goods sold (667000-15000)		652000
Gross profit		457000
Selling and administrative expense
Selling expense	262000
Administrative expense	160000
Total Selling and administrative expense		422000
Net operating income		35000

2) Schedule cost of goods sold

Beginning finished goods	36000
Cost of goods manufactured	714000
Cost of goods available for sale	750000
Ending finished goods	83000
Unadjusted cost of goods sold	667000
Less: over applied overhead	-15000
Adjusted cost of goods sold	652000

3) Schedule of cost of goods manufactured

Direct material
Beginning raw material	51000
Raw material purchase	262000
Raw material available for use	313000
Less; Ending raw material	-39000
Direct material used		274000
Direct labor		32000
Manufacturing overhead applied		374000
Total manufacturing cost		680000
Beginning work in process		61000
Total cost of work in process		741000
Ending work in process		27000
Cost of goods manufactured		714000