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 Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 219,000 $ 268,000 > $ 153,000 $366,000 $ 353,000 3:54:52 Inventory balances at the beginning and end of the year were as follows: Beginning $ 60,000 Raw materials Work in process Finished goods Ending $ 35,000 528,eee $ 31,000 The total manufacturing costs added to production for the year were $675,000, the cost of goods available for sale totaled $735,000; the unadjusted cost of goods sold totaled $660,000, and the net operating income was $38,000. 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

Amount($) Preparation of Income Statement, COGM and COGS: SUPERIOR COMPANY Income Statement Particulars Sales (410000+647000) Less: Cost of goods sold (Refer COGS Schedule) Gross margin (372000+38000) Selling and administrative expenses: Selling Expenses Administrative Expense Net operating income (Given) Amount($) $ 10,57,000 $ 6,47,000 $ 4,10,000 $ $ 2,19,000 1,53,000 $ $ 3,72,000 38,000 SUPERIOR COMPANY Schedule of cost of goods sold Particulars Amount($) Beginning Finished Goods $ 31,000 Add: Cost of goods manufactured (Refer COGM Schedu $ 7,07,000 Cost of goods available for sale $ 7,38,000 Less: Ending Finished Goods $ 78,000 Unadjusted Cost of goods sold $ 6,60,000 Less: Over applied overhead ($353,000-$366,000) $ -13,000 Adjusted Cost of goods sold $ 6,47,000 SUPERIOR COMPANY Schedule of Cost of Goods Manufactured Particulars Amount($) Amount($) Direct materials: Beginning Raw materials inventory $ 60,000 Add: Raw materials purchases $ 2,68,000 Raw materials available for use $ 3,28,000 Less: Ending Raw materials inventory $ -35,000 Direct Raw materials used in production $ 2,93,000 Direct labor $ 16,000 Manufacturing Overhead applied to work in process $ 3,66,000 Total manufacturing costs (Given) $ 6,75,000 Add: Beginning Work in process inventory $ 60,000 Total cost of work in process $ 7,35,000 Less: Ending Work in process inventory $ -28,000 Cost of goods manufactured $ 7,07,000 * Kindly Comment down for any clarifications/ queries and please upvote.