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	$	140,000
Purchases of raw materials	$	290,000
Direct labor		?
Administrative expenses	$	100,000
Manufacturing overhead applied to work in process	$	285,000
Actual manufacturing overhead cost	$	270,000

 

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

 

	Beginning of Year			End of Year
Raw materials	$	40,000		$	10,000
Work in process		?		$	35,000
Finished goods	$	50,000			?

 

The total manufacturing costs for the year were $683,000; the cost of goods available for sale totaled $740,000; the unadjusted cost of goods sold totaled $660,000; and the net operating income was $30,000. 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.)

It would be greatly appreciated if you could explain how you got your answers! I answered the problem but am not sure what I got wrong.

Answer 1

Solution :

Superior Company
Schedule of cost of goods manufactured
For year ended December 31
Particulars		Amount
Direct materials:
Beginning inventory of raw materials	$40,000.00
Raw material purchases	$290,000.00
Raw materials available for use	$330,000.00
Less: Ending inventory of raw materials	$10,000.00
Direct materials used		$320,000.00
Direct labor		$78,000.00
Manufacturing overhead applied		$285,000.00
Total manufacturing costs		$683,000.00
Add: beginning WIP		$42,000.00
Total cost of work in process		$725,000.00
Less: Ending WIP		$35,000.00
Cost of goods manufactured		$690,000.00

Superior Company
Schedule of cost of goods sold
For year ended December 31
Particulars	Amount
Beginning finished goods inventory	$50,000.00
Add: Cost of goods manufactured	$690,000.00
Cost of goods available for sale	$740,000.00
Less: Ending finished goods inventory	$80,000.00
Unadjusted Cost of goods sold	$660,000.00
Less: Over applied overhead	$15,000.00
Adjusted cost of goods sold	$645,000.00

Superior Company
Income Statement
For year ended December 31
Particulars	Amount
Sales revenue	$915,000.00
Cost of goods sold	$645,000.00
Gross profit	$270,000.00
Selling Expenses	$140,000.00
Administrative Expenses	$100,000.00
Operating Income	$30,000.00

Excel 9 - Microsoft Excel Page Layout Review View File Home Insert Formulas Data aDefine Name Trace Precedents fr Show Formulas Calculate Now A Trace Dependents Use in Formula Error Checking Calculation Calculate Sheet Options AutoSum Recently Financial Logical Text Date & Lookup & Time Reference & Trig Functions Insert Math More Name Watch Remove Arrows Evaluate Formula Window Manager Create from Selection Function Used Formula Auditing Function Library Defined Names Calculation F2 B C D P G H 2 Superior Company Schedule of cost of goods sold Superior Company 3 Schedule of cost of goods manufactured 4 For year ended December 31 For year ended December 31 5 Particulars Particulars Amount 6 Amount 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 Direct materials: 50000 7 Beginning inventory of raw materials Raw material purchases Raw materials available for use 40000 -G9-G7 740000 8 290000 G9-G11 -C8+C9 10 Less: Ending inventory of raw materials Direct materials used Direct labor 10000 660000 11 15000 -C10-C11 12 Less: Over applied overhead |Adjusted cost of goods sold -D15-D12-D14 G11- G12 13 Manufacturing overhead applied Total manufacturing costs Add: beginning WIP Total cost of work in process Less: Ending WIP Cost of goods manufactured 14 285000 683000 15 D17-D15 16 Superior Company D18 +D19 17 35000 Income Statement 18 For year ended December 31 19 -G8 Particulars 20 Amount Sales revenue -G22+G23 21 Cost of goods sold Gross profit Selling Expenses Administrative Expenses Operating Income Sheet107 (60) Sheet305 (7), -G13 22 -G24+G25+G26 23 140000 100000 24 25 30000 26 Sheet459 (2) Sheet464 Sheet107 (59) Sheet462 Sheet463 Sheet461 100% ( II Ready Circular References 8:45 AM Microsoft Excel WAnswers - Micros... Inbox-pankaj.gar... Answers Superior Compan... image-Windows... 9/24/2019