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 $140,000

Purchases of raw materials $290,000

Direct labor ?

Administrative expenses $100,000

Manufacturing overhead applied to work in process $285,000

Actual manufacturing overhead cost $270,000

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

BEGINNING OF YEAR END OF YEAR

Raw Materials $40,000 $10,000

Work in process ? $35,000

Finished goods. $50,000 ?

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 over applied 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

Answer-1)-

SUPERIOR COMPANY
COST OF GOODS MANUFACTURED REPORT
PARTICULARS	AMOUNT
	$
Beginning Raw Materials Inventory	40000
Add- Raw Material Purchases	290000
Total raw materials available	330000
Less-Ending Raw Material Inventory	10000
Raw Materials Used in production	320000
Direct Labor	78000
Manufacturing Overhead applied to work in process	285000
Total current manufacturing costs	683000
Add- Beginning Work in Process Inventory	42000
Total work in process	725000
Less- Ending Work in Process Inventory	35000
Cost of goods manufactured	690000

2)-

SUPERIOR COMPANY
COST OF GOODS SOLD
PARTICULARS		Amount
		$
Beginning finished goods inventory		50000
Add: Cost of goods manufactured		690000
Cost of goods available for sale		740000
Less: Ending finished goods inventory		80000
Unadjusted Cost of goods sold		660000
Less- Overapplied overhead	($285000-$270000)	15000
Adjusted Cost of goods sold		645000

3)-

SUPERIOR COMPANY
INCOME STATEMENT
PARTICULARS	AMOUNT	AMOUNT
	$	$
Sales		915000
Less-Cost of goods sold		645000
Gross margin		270000
Less- Selling & administrative expenses		240000
Selling expenses	140000
Administrative expenses	100000
Net Operating income		30000