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	$	211,000
Purchases of raw materials	$	264,000
Direct labor		?
Administrative expenses	$	154,000
Manufacturing overhead applied to work in process	$	369,000
Actual manufacturing overhead cost	$	358,000

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

	Beginning of Year			End of Year
Raw materials	$	54,000		$	36,000
Work in process		?		$	24,000
Finished goods	$	31,000			?

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 $665,000; 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.)

Complete this question by entering your answers in the tabs below. Income Statement COGS Schedule COGM Schedule -35 Prepare an income statement for the year. Superior Company Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: ces Administrative expenses Selling expenses Net operating income - COGS Schedule )

Answer 1

Income Statement
Sales		1051000
Cost of goods sold		654000
Gross margin .		397000
Selling and administrative expenses:
Selling expenses	211000
Administrative expense	154000	365000
Net operating income		32000
Schedule of Cost of Goods Sold
Finished goods inventory, beginning		31000
Add: Cost of goods manufactured		714000
Cost of goods available for sale		745000
Deduct: Finished goods inventory, ending		80000
Unadjusted cost of goods sold		665000
Less: Overapplied overhead		11000
Adjusted cost of goods sold		654000
Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials inventory, beginning	54000
Add: Purchases of raw materials	264000
Total raw materials available	318000
Deduct: Raw materials inventory, ending	36000
Raw materials used in production		282000
Direct labor		24000
Manufacturing overhead applied to work in process inventory		369000
Total manufacturing costs		675000
Add: Beginning work in process inventory		63000
		738000
Deduct: Ending work in process inventory		24000
Cost of goods manufactured		714000