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 $ 140,000 $ 290,000 ? $ 100,000 $ 285,000 $ 270,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning of Year $ 40,000 ? $ 50,000 End of Year $ 10,000 $ 35,000 ? The total manufacturing costs for the year were $683,000; the cost of goods available for sale totaled $740,000; the unadjusted cost of goods sold totaled $660,000; and the net operating income was $30,000. 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

Sales 915000 Selling Expenses 140000 Raw Material Purchases 290000 Direct Labor 78000 Administrative Expenses 100000 Manufacturing overhead applied to work in process 285000 Actula Manufactruing overeheads cost 270000 Total Manufacturring Cost 683000 Cost of Goods available for Sales 740000 Unadjusted Cost of Goods Sold 660000 Net operating income 30000 Inventories Beginning Ending Raw Material 40000 10000 Work in Process 42000 35000 Finished Goods 50000 80000

683000 320000 285000 78000 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 740000 50000 690000 35000 683000 42000 740000 660000 80000

915000 645000 270000 140000 100000 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 240000 30000 50000 690000 740000 80000 660000 15000 645000

Schedule of Cost of Goods Manuacturing Direct Material Beginning Raw Material 40000 ADD: Purchase of Raw Material 290000 Total raw Material Available 330000 LESS: Ending Raw Material inventory 10000 Raw material Used in Prodcution Direct Labor Manufacturing overheads Applied Total Manufacturing cost ADD Beginning Work in Process 320000 78000 285000 683000 42000 725000 35000 690000 LESS: Ending Work in Process Cost of Goods Manufactured