Question

Checkr 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 $ 218,000 $ 264,000 > $ 153,000 $364,000 $ 351,000 ok Inventory balances at the beginning and end of the year were as follows: ences Raw materials Work in process Finished goods Beginning $ 54,000 ? $ 39,000 Ending $ 37,000 $ 30,000 The total manufacturing costs added to production for the year were $690,000; the cost of goods available for sale totaled $745.000; the unadjusted cost of goods sold totaled $668,000; and the net operating income was $37,000. 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

Superior Company
Income Statement
Sales		1063000
Cost of Goods Sold (668000-13000)		655000
Gross Margin		408000
Less: Operating Exp.
Sellin g Exp.	218000
Admin Exp.	153000	371000
Operating income		37000

Superior Company
Cost of goods sold
Beginning finished goods inventory	39000
Add: Cost of goods manufactured	706000
Cost of goods available for sales	745000
Less: ending finished goods inventory	-90000
Cost of goods sold	655000

Computation of Cost of Goods Manufactured
Particulars		Amount
Direct Material Used:
Beginning Raw Material	54000
Add: Raw Material Purchase	264000
Total Raw Material Available	318000
Less: Ending Raw Material	-37000
Total Raw Material Used		281000
Direct Labor		45000
Manuf. OH applied		364000
Total Manuf. Cost		690000
Add. Opening WIP		46000
		736000
Less: Closing WIP		-30000
Cost of of goods Manufactured		706000