Question

How do you calculate Sales for this income statement with the information pictured?
Problem 3-13 (Algo) Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement (LO3-3] 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 $ 211,000 $ 268,000 2 $ 157,000 $ 371,000 $ 359,000 Inventory balances at the beginning and end of the year were as follows: Beginning $ 55,000 Raw materials Work in process Finished goods Ending $ 35,000 $ 26,000 2 $ 38,000 The total manufacturing costs added to production for the year were $685,000; the cost of goods available for sale totaled $725,000; the unadjusted cost of goods sold totaled $669,000; and the net operating income was $40,000. The company's underapplied 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 onde cold first followed by the erhedule of cost of annde manufactured

Answer 1

SUPERIOR COMPANY Schedule of Cost of Goods Manufactured
Direct materials:
Raw materials inventory, Beginning	$ 55,000
Add: Purchases of raw materials	$ 268,000
Total raw materials available	$ 323,000
Less : Raw materials inventory, Ending	($ 35,000)
Raw materials used in production		$ 288,000
Direct labor ( $ 685,000 (-) $ 288,000 (-) $ 371,000 )		$ 26,000
Manufacturing overhead applied to work in process inventory		$ 371,000
Total Manufacturing costs		$ 685,000
Add: Beginning work in process inventory		$ 28,000 ( $ 713,000 (-) $ 685,000 )
		$ 713,000 ( $ 687,000 + $ 26,000 )
Less : Ending work in process inventory		($ 26,000)
Cost of Goods manufactured		$ 687,000

SUPERIOR COMPANY Schedule of Cost of Goods Sold
Finished goods inventory, Beginning	$ 38,000
Add: Cost of goods manufactured ( $ 725,000 (-) $ 38,000)	$ 687,000
Cost of goods available for sale	$ 725,000
Less : Finished goods inventory, Ending	($ 56,000) ( $ 725,000 (-) $ 669,000 )
Unadjusted cost of goods sold	$ 669,000
Less : Overapplied overhead               ( $ 359,000 (-) $ 371,000 )	($ 12,000)
Adjusted cost of goods sold	$ 657,000

SUPERIOR COMPANY Income Statement
Sales		$ 1,065,000 ( $ 657,000 + $ 408,000 )
Cost of goods sold		($ 657,000)
Gross margin		$ 408,000
Less: Selling and administrative expenses:
- Selling expenses	$ 211,000
- Administrative expense	$ 157,000	($ 368,000)
Net operating income		$ 40,000