Question

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

Selling expenses	$	216,000
Purchases of raw materials	$	263,000
Direct labor		?
Administrative expenses	$	151,000
Manufacturing overhead applied to work in process	$	371,000
Actual manufacturing overhead cost	$	351,000

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

	Beginning of Year			End of Year
Raw materials	$	51,000		$	40,000
Work in process		?		$	31,000
Finished goods	$	35,000			?

The total manufacturing costs for the year were $670,000; the cost of goods available for sale totaled $725,000; the unadjusted cost of goods sold totaled $668,000; and the net operating income was $33,000. 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.)

Income Statement COGS Schedule COGM Schedule Prepare an income statement for the year. Superior Company Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Manufacturing overhead Net operating income Income Statement COGS Schedule COGM Schedule Prepare a schedule of cost of goods sold. Superior Company Schedule of Cost of Goods Sold Adjusted cost of goods sold Income Statement COGS Schedule COGM Schedule Prepare a schedule of cost of goods manufactured. Superior Company Schedule of Cost Goods Manufactured Direct materials: Total raw materials available Raw materials used in production Total manufacturing costs Cost of goods manufactured

Answer 1

SUPERIOR COMPANY Income Statement Sales Less: adjusted Cost of Goods Sold Gross Margin Selling and administrative Expenses Selling Expenses $ Administrative Expenses S S S S 1,048,000 648,000 400,000 216,000 151,000 S $ 367,000 33,000 Net Operative Income SUPERIOR COMPANY Schedule Cost of goods Sold Finished goods inventory, beginning $ 35,000 Add: Cost of Goods manufactured $ 690,000 Cost of goods available for sale $ 725,000 Less: Finished goods inventory, ending S 57,000 Unadjusted cost of goods sold $ 668.000 Less: Over applied overhead $ 20,000 Adjusted Cost of goods sold S 648,000 Note: Over Applied Overhead =Manufacturing overhead applied to work in process - Actual manufacturing overhaed cost = $371,000-$351,000 = $20000

SUPERIOR COMPANY Schedule Cost of goods Manufactured Schedule Direct Material: |Raw Material inventory Beginning $ 51,000 Add: Raw materials purchases S 263.000 Raw materials available $ 314,000 Less: Raw materials inventory Ending S 40.000 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 $ $ $ $ $ $ $ 274.000 25,000 371,000 670,000 51,000 31,000 690,000