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 $ 213,000 $ 266,000 2 $ 154,000 $ 367,000 $ 353,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Tinished goods Beginning of Year $ 59,000 2 $ 32,000 End of Year $ 32,000 $ 31,000 2 The total manufacturing costs for the year were $675,000; the cost of goods available for sale totaled $750,000; the unadjusted cost of goods sold totaled $662,000; 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.) 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

S S SUPERIOR COMPANY Income Statement Sales Less: adjusted Cost of Goods Sold Gross Margin Selling and administrative Expenses Selling Expenses $ Administrative Expenses $ 1,048,000 648,000 400,000 S 213,000 154,000 $ 367,000 33,000 Net Operative Income $ SUPERIOR COMPANY Schedule Cost of goods Sold Finished goods inventory, beginning $ 32,000 Add: Cost of Goods manufactured S 718,000 Cost of goods available for sale $ 750,000 Less: Finished goods inventory, ending S 88,000 Unadjusted cost of goods sold $ 662,000 Less: Over applied overhead S 14,000 Adjusted Cost of goods sold S 648,000 Note: Over Applied Overhead =Manufacturing overhead applied to work in process - Actual manufacturing overhaed cost = $367,000-$353,000 = $14,000

$ 74,000 SUPERIOR COMPANY Schedule Cost of goods Manufactured Schedule Work in Process Inventory, Beginning Direct Material : Raw Material inventory Beginning $ 59,000 Add: Raw materials purchases $ 266,000 Total Raw materials available $ 325,000 Less: Raw materials inventory Ending $ 32,000 Raw Materials used in production $ Direct Labour S Manufacturing overhead applied to work in Process $ Total Manufacturing Costs added to production Total Manufacturing Costs to account for Less: work in process inventory Ending Cost of goods Manufactured 293,000 15,000 367,000 $675,000 $749,000 $ 31,000 $718,000