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	$	213,000
Purchases of raw materials	$	260,000
Direct labor		?
Administrative expenses	$	152,000
Manufacturing overhead applied to work in process	$	375,000
Actual manufacturing overhead cost	$	357,000

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

	Beginning of Year			End of Year
Raw materials	$	53,000		$	36,000
Work in process		?		$	29,000
Finished goods	$	36,000			?

The total manufacturing costs for the year were $680,000; the cost of goods available for sale totaled $740,000; the unadjusted cost of goods sold totaled $661,000; and the net operating income was $32,000. 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.)

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

Schedule of COGS

Adjusted Cost of Goods sold

Income Statement

Selling and administrative expenses:

Answer 1

Schedule of Cost of Goods Manufactured
Direct materials:
Beginning of Year Raw materials	53000
Purchases of raw materials	260000
Total raw materials available	313000
Less End of year Raw Material	36000
Raw materials used in production		277000
Direct labor		28000
Manufacturing overhead		375000
Total manufacturing cost		680000
Add: Work in process inventory, beginning		50000
		730000
Deduct: Work in process inventory, ending (given)		29000
Cost of goods manufactured		701000
Schedule of COGS
Finished goods inventory, beginning (given)	36000
Add: Cost of goods manufactured	704000
Goods available for sale (given)	740000
Deduct: Finished goods inventory, ending	79000
Cost of goods sold (given)	661000
Less Over applied Manufacturing overhead	18000
Adjusted Cost of Goods sold	643000
Income Statement
Sales	1040000
Cost of goods sold	643000
Gross Profit	397000
Selling expenses	213000
Administrative expenses	152000
net operating income	32000