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	$	215,000
Purchases of raw materials	$	264,000
Direct labor		?
Administrative expenses	$	160,000
Manufacturing overhead applied to work in process	$	365,000
Actual manufacturing overhead cost	$	352,000

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

	Beginning of Year			End of Year
Raw materials	$	53,000		$	39,000
Work in process		?		$	29,000
Finished goods	$	31,000			?

The total manufacturing costs for the year were $680,000; 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 $34,000. 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.)

Prepare an income statement for the year.

	Superior Company Income Statement 0 Selling and administrative expenses: 0

	Superior Company Schedule of Cost of Goods Sold Adjusted cost of goods sold

	Superior Company Schedule of Cost Goods Manufactured Direct materials: Total raw materials available Raw materials used in production Total manufacturing costs 0 Cost of goods manufactured

Answer 1

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.)

Prepare an income statement for the year.

	Superior Company Income Statement Sales 1059000 Cost of goods sold (663000-13000) 650000 Gross profit 409000 Selling and administrative expenses: Selling expense 215000 Administrative expense 160000 Total Selling and administrative expense 375000 Net operating income 34000

	Superior Company Schedule of Cost of Goods Sold Beginning finished goods 31000 Cost of goods manufactured 694000 Cost of goods available for sale 725000 Ending finished goods 62000 Unadjusted cost of goods sold 663000 Over applied overhead -13000 Adjusted cost of goods sold 650000

	Superior Company Schedule of Cost Goods Manufactured Direct materials: Beginning raw material 53000 Raw material purchase 264000 Total raw materials available 317000 Less: Ending raw material -39000 Raw materials used in production 278000 Direct labor 37000 Manufacturing overhead applied 365000 Total manufacturing costs 680000 Beginning work in process 43000 Total Cost of work in process 723000 Less: Ending work in process 29000 Cost of goods manufactured 694000