Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials):
Selling expenses | $ | 216,000 |
Purchases of raw materials | $ | 268,000 |
Direct labor | ? | |
Administrative expenses | $ | 153,000 |
Manufacturing overhead applied to work in process | $ | 372,000 |
Actual manufacturing overhead cost | $ | 358,000 |
Inventory balances at the beginning and end of the year were as follows:
Beginning of Year | End of Year | |||||
Raw materials | $ | 52,000 | $ | 38,000 | ||
Work in process | ? | $ | 32,000 | |||
Finished goods | $ | 39,000 | ? | |||
The total manufacturing costs for the year were $690,000; the cost of goods available for sale totaled $725,000; the unadjusted cost of goods sold totaled $661,000; 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 :
Step -1
Superior Company | ||
Income statement | ||
Sales | $ 1054000 | |
Cost of goods sold ( Adjusted) | $ 647000 | |
Gross margin | $ 407000 | |
Selling and administrative expenses : | ||
Selling Expenses | $ 216000 | |
Adminstrative expenses | $ 153000 | $ 369000 |
Net Operating Income | $ 38000 | |
Working note -1
Cost of goods sold ( Adjusted)
= Unadjusted cogs - Over applied overhead
= $ 661000 - $ 14000
= $ 647000
Overapplied overhead = Manufacturing overhead applied - Actual Manufacuring overhead
= $ 372000 - $ 358000
= $ 14000
Working Note -2
Computation of sales
Sales = cost of goods sold (adjusted) + Gross margin
= $ 647000 + $ 407000
= $ 1054000
Gross margin = Net operating income + Selling and administrative expenses
= $ 38000 + $ 369000 = $ 407000
Step -2
Superior company | |
schedules of cost of goods sold | |
Beginning Finished goods Inventory | $ 39000 |
Add - cost of goods manufactured | $ 686000 |
Cost of goods available for sale | $ 725000 |
Less - Ending Finished goods Inventory | $ 64000 |
Unadjusted cost of goods sold | $ 661000 |
Less - Overapplied overhead | $ 14000 |
Adjusted Cost of goods sold | $ 647000 |
Working note -3
Cost of goods manufactured = Cost of goods available for sale - Beginning Finished goods Inventory
= $ 725000 - $ 39000 = $ 686000
Working note -4
Ending Finished goods Inventory = Cost of goods available for sale -, Unadjusted cost of goods sold
= $ 725000 - $ 661000 = $ 64000
Step -3
Superior company | ||
schedules of cost of goods manufactured | ||
Direct Materials : | ||
Beginning raw material Inventory | $ 52000 | |
Add : Purchase of raw material | $ 268000 | |
Total raw materials available | $ 320000 | |
Less - Ending Raw material Inventory | $ 38000 | |
Raw material used in production | $ 282000 | |
Direct Labor | $ 36000 | |
Manufacturing overhead applied to Work in process | $ 372000 | |
Total Manufacturing cost | $ 690000 | |
Add : Beginning Work in proess Inventory | $ 28000 | |
Less : Ending Work in process Inventory | $ 32000 | |
Cost of Goods manufactured | $ 686000 | |
Working note -5
Direct Labor = Total Manufacturing cost - Manufacturing overhead applied to Work in process - Raw material used in production
= $ 690000 - $ 372000 - $ 282000 = $ 36000
Working note -6
Beginning Work in proess Inventory = Cost of Goods manufactured + Ending Work in process Inventory - Total Manufacturing cost
= $ 686000 + $ 32000 - $ 690000
= $ 28000
Superior Company provided the following data for the year ended December 31 (all raw materials are...
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 $ 216,000 $ 264,000 ? $ 158,000 $ 378,000 $ 360,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning $ 59,000 ? $ 37,000...
Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): $ 214,000 $ 265,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 158,000 $ 372,000 $360,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning of End of Year Year $ 57,000...
Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials) $218,800 selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead appl1 Actual manufacturing overhead cost $261,eee $151,eee n process 367,e0e $ 352,e9e Inventory balances at the beginning and end of the year were as follows: . Beginning of Year End of Year ences Raw naterials Work in process Finished goods 34,800 ?25,000 56,800 31,ee The...
Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): $ 219,000 $ 269,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 151,000 $376,000 $ 359,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning of End of Year Year $ 52,000...
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 $ 215,000 $ 269,000 ? $ 156,000 $ 371,000 $ 354,000 Inventory balances at the beginning and end of the year were as follows: Beginning of Year $ 54,000 Raw materials Work in process Pinished goods End...
Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials) 3 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 210,000 $ 264,000 2 $ 154, $367,000 $ 356,000 2 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning of Year End of...
Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): Selling expenses $ 216,000 Purchases of raw materials $ 263,000 Direct labor ? Administrative expenses $ 151,000 Manufacturing overhead applied to work in process $ 371,000 Actual manufacturing overhead cost $ 351,000 Inventory balances at the beginning and end of the year were as follows: Beginning of Year End of Year Raw materials $ 51,000 $ 40,000 Work...
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 rav naterials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost ts s 220,000 s 263,000 154,000 369,000 356,000 eflook Inventory balances at the beginning and end of the year were as follows: Priet Beginning of Year End of $ 55,000 32,000 Year Raw material Work in process...
Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): $ 219,000 268,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost 153,000 5 366,000 $ 353,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning $ 60,000 ? $ 31,000 Ending $ 35,000...
Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): $ 213,000 $ 266,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 153,000 $ 371,000 $360,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning of Year End of Year $ 52,000...