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 $ 220,000 $ 263,000 ? $ 158,000 $ 379,000 $ 359,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning of Year $ 59,000 ? $ 31,000 End of Year $ 30,000 $ 33,000 2 The total manufacturing costs for the year were $675,000; the cost of goods available for sale totaled $725,000; the unadjusted cost of goods sold totaled $667,000; 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.) Complete this question by entering your answers in the tabs below.

Answer 1

Income Statement
Sales [415000+647000]		$      1,062,000
-Cost of goods sold		$          647,000
=Gross margin [37000+378000]		$          415,000
Operating expenses:
Selling expenses	$         220,000
Administrative expenses	$         158,000
-Total operating expenses		$          378,000
=Net operating income		$            37,000
Schedule of Cost of Goods Sold
Beginning finished goods inventory	$            31,000
+Cost of goods manufactured [725000-31000]	$         694,000
Cost of goods available for sale	$         725,000
-Ending finished goods inventory [725000-667000]	$            58,000
Unadjusted cost of goods sold	$         667,000
-Overapplied overhead [379000-359000]	$            20,000
Adjusted cost of goods sold [667000-20000]	$         647,000
Schedule of Cost of Goods Manufactured
Direct Materials:
Beginning raw materials inventory	$            59,000
Add: Purchases of raw materials	$         263,000
Total raw materials available	$         322,000
Less: Ending raw materials inventory	$            30,000
Raw materials used in production		$          292,000
+Direct labor [675000-379000-292000]		$               4,000
+Manufacturing overhead applied to work in process		$          379,000
Manufacturing costs added during the year		$          675,000
Add: Beginning WIP inventory [727000-675000]		$            52,000
Total manufacturing costs		$          727,000
Less: Ending work in process inventory		$            33,000
Cost of goods manufactured		$          694,000