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	$	218,000
Purchases of raw materials	$	266,000
Direct labor		?
Administrative expenses	$	155,000
Manufacturing overhead applied to work in process	$	370,000
Actual manufacturing overhead cost	$	356,000
Inventory balances at the beginning and end of the year were as follows: Beginning of Year End of Year Raw materials $ 55,000 $ 33,000 Work in process ? $ 26,000 Finished goods $ 35,000 ? The total manufacturing costs for the year were $680,000; the cost of goods available for sale totaled $745,000; the unadjusted cost of goods sold totaled $669,000; and the net operating income was $33,000. 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

Direct Material used:
Beginning balance of RM			55000
Add: Purchase			266000
Less: Ending balance of RM			-33000
Raw material usued			288000
Total Mfg cost:			680000
Less: Diret material			288000
Less: manufacturing Oh			370000
Direct labour cost			22000
Cost of goods available for sales			745000
Less: Cost of good ssold			669000
Ending inenntory of FG			76000
Under/Over-applied h
Overheads incurred			356000
Overheads applied			370000
Over-applied OH			14000
Cost of goods available for sales			745000
Less: Beginning inventory of FG			35000
Cost of goods manufactured			710000
Add: Endning inventory of WIP			26000
Less: Total manufacturing cost			-680000
Beginning inventry of Wip			56000
Sales:
Cost of good ssold			669000
Over-applied OH			-14000
Selling expenses			218000
Admin expenses			155000
Net income			33000
Total sales revennue			1061000
Cost of goods manufactured:
Direct materiall
Beginning inventory of RM			55000
Add; Purchase			266000
Total Material available			321000
Less: Ending inventory of Rm			33000
Direct material cost				288000
Direct labour				22000
Manufacturing oh applied				370000
Total manufacturing cost				680000
Add: Beginning WIP				56000
Total cost of Wip				736000
Less: Ending inventoryy of WIP				26000
Cost of goods manufactured:				710000
Cost of Goods sold:
Beginning inventory of FG				35000
Add:; Cost of goods manufactured				710000
Total cost of goods available for sale				745000
Less; Ending inventory of FG				76000
Cost of Goods sold:				669000
Less: Over-applied Oh				14000
Adjusted Cost of good ssold				655000
Income Statement
Sales revenue				1061000
Less: Adjusted cost of goods sold				655000
Gross profit				406000
Operating expenses:
Selling expenses			218000
Admin expenses			155000
Total operating expenses				373000
Net Income				33000