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): $ 212,000 $ 264,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 156,000 $ 370,000 $ 357,000 Inventory balances at the beginning and end of the year were as follows: Raw materiala Work in process Finished goods Beginning of Year $ 60,000 2 $ 31,000 End of Year $35,000 $ 27,000 The total manufacturing costs for the year were $675,000, the cost of goods available for sale totaled $745,000; the unadjusted cost of goods sold totaled $662,000; and the net operating income was $37,000. 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.) Complete this question by entering your answers in the tabs below. Income Statement COGS Schedule COGM Schedule Prepare an income statement for the year Superior Company Income Statement

Answer 1

Overhead overapplied = Manufacturing overhead applied to WIP - Actual manufacturing overhead
= $370,000 - $357,000
= $13,000

Adjusted Cost of Goods sold = Unadjusted COGS - Overapplied overhead
= $662,000 - $13,000
= $649,000

Preparation of schedules are as follows:-

Income Statement Sales Less: Cost of goods sold Gross Margin Selling and admin. Expenses Selling expenses Administrative expenses $ $ $ 10,54,000.00 6,49,000.00 4,05,000.00 $ $ 2,12,000.00 1,56,000.00 $ $ 3,68,000.00 37,000.00 Net Operating Income Schedule of Cost of Goods Sold Beginning finished goods inventory Add: Cost of goods manufactured Cost of goods available for sale Less: Ending finished goods inventory Unadjusted cost of goods sold Less: Overapplied overhead Adjusted Cost of Goods sold 31,000.00 7,14,000.00 7,45,000.00 83,000.00 6,62,000.00 13,000.00 6,49,000.00

Schedule of Cost of Goods Manufactured Direct Materials: Beginning raw material inventory Add; Purchases of raw material Total raw materials available Less: Ending raw materials inventory Raw materials used in production Direct labor Manufacturing overhead applied to WIP Total manufacturing costs Add: Beginning WIP 60,000.00 2,64,000.00 3,24,000.00 35,000.00 $ $ 2,89,000.00 16,000.00 3,70,000.00 6,75,000.00 66,000.00 7,41,000.00 27,000.00 7,14,000.00 $ $ Less: Closing WIP Cost of goods manufactured $