Question

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	$	211,000
Purchases of raw materials	$	262,000
Direct labor		?
Administrative expenses	$	153,000
Manufacturing overhead applied to work in process	$	374,000
Actual manufacturing overhead cost	$	360,000

Inventory balances at the beginning and end of the year were as follows:

	Beginning			Ending
Raw materials	$	56,000		$	31,000
Work in process		?		$	30,000
Finished goods	$	31,000			?

The total manufacturing costs added to production for the year were $675,000; the cost of goods available for sale totaled $725,000; the unadjusted cost of goods sold totaled $663,000; and the net operating income was $36,000. 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.)

1) Prepare an Income Statement for the year.

2) Prepare a schedule of cost of goods sold.

3) Prepare a schedule of cost of goods manufactured.

Answer 1

Sales 1049000 Selling Expenses 211000 Raw Material Purchases 262000 Direct Labor 14000 Administrative Expenses 153000 Manufacturing overhead applied to work in process 374000 Actula Manufactruing overeheads cost 360000 Total Manufacturring Cost 675000 Cost of Goods available for Sales 725000 Unadjusted Cost of Goods Sold 663000 Net operating income 36000 Inventories Beginning Ending Raw Material 56000 31000 Work in Process 49000 30000 Finished Goods 31000 62000

675000 287000 374000 14000 Calcualtion of Missing Amounts Direct Labor Calculation Total Manufacturring Cost Less : Raw Material Availabe for sales Manufacturing overhads Direct Labor Beginning Work in Process Cost of Goods Available for Sale LESS: Beginning Finished Goods cost of Goods Manufactured ADD: work in Process Ending Less Total Manufactring cost Beginning Work in Process Ending Finished Goods Cost of Goods Available for Sale Less: Unadjusted Cost of Goods Sold Ending Finished Goods 725000 31000 694000 30000 675000 49000 725000 663000 62000

1049000 649000 400000 211000 153000 Answers Income Statement Sales Cost of Goods Sold Gross Margin Selling and Administrstive Expenes Selling Expenses Administrative Expenses Net Oprating Income Cost of Goods Sold Beginning Finished Goods Inventory ADD: Cost of Goods Manufactured Cost of Goods Available for Sale LESS:Ending Finished Goods Invenotry Unadjusted Cost of Goods Sold Less Overapplied Overhead Adjusted cost of Goods Sold 364000 36000 31000 694000 725000 62000 663000 14000 649000

Schedule of Cost of Goods Manuacturing Direct Material Beginning Raw Material 56000 ADD: Purchase of Raw Material 262000 Total raw Material Available 318000 LESS: Ending Raw Material inventory 31000 Raw material Used in Prodcution Direct Labor Manufacturing overheads Applied Total Manufacturing cost ADD Beginning Work in Process 287000 14000 374000 675000 49000 724000 30000 694000 LESS: Ending Work in Process Cost of Goods Manufactured