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 $ 212,000 $ 268,000 ? $ 157,000 $ 373,000 $ 354,000 Inventory balances at the beginning and end of the year were as follows: Beginning $ 54,000 Raw materials Work in process Finished goods Ending $ 36,000 $ 26,000 $ 34,000 The total manufacturing costs added to production for the year were $680,000; the cost of goods available for sale totaled $745,000; the unadjusted cost of goods sold totaled $666,000; 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.)

Answer 1

Solution

Superior company
Income statement
Sales revenue		$   1,049,000.00
Less: Cost of goods sold		$       647,000.00
Gross profit		$       402,000.00
Selling and administrative expenses
Selling expenses	$       212,000.00
Administrative expenses'	$       157,000.00	$       369,000.00
Net income		$         33,000.00

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Superior company
Schedule of cost of goods sold
Beginning Finished Goods Inventory		$         34,000.00
Add: Cost of goods manufactured		$       711,000.00
Goods Available for sale		$       745,000.00
Less :Ending Finished goods Inventory		$         79,000.00
Unadjusted Cost of Goods Sold		$       666,000.00
Overapplied Manufacturing overheads		$       (19,000.00)
Adjusted cost of goods sold		$       647,000.00

.

Superior company
Schedule of Cost of Goods Manufactured
Direct Material
Raw material Inventory Beginning	$         54,000.00
Raw material Purchased	$       268,000.00
Raw material available for use	$       322,000.00
Less: Raw material Inventory Ending	$         36,000.00
Direct Material Used		$       286,000.00
Direct labor		$         21,000.00
Total Manufacturing overheads		$       373,000.00
Total manufacturing Cost During the month		$       680,000.00
Add: Work in progess Beginning		$         57,000.00
Total Work in Process		$       737,000.00
Less: Work in progress Ending		$         26,000.00
Cost of Goods Manufactured		$       711,000.00