Question

Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): $ 214,000 $ 265,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 158,000 $ 372,000 $360,000 Inventory balances at the beginning and end of the year were as follows: Raw materials Work in process Finished goods Beginning of End of Year Year $ 57,000 $ 32,000 ? $ 26,000 $ 36,000 The total manufacturing costs for the year were $685,000; the cost of goods available for sale totaled $735,000; the unadjusted cost of goods sold totaled $661,000; and the net operating income was $38,000. 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. Income Statement COGS Schedule COGM Schedule Prepare an income statement for the year. Superior Company Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses Administrative expenses Net operating income < Income Statement COGS Schedule >

Answer 1

Income statement

Sales revenue		1059000
Cost of goods sold (661000-12000)		649000
Gross profit		410000
Selling and administrative expense
Selling expense	214000
Administrative expense	158000
Total Selling and administrative expense		372000
Net operating income		38000

2) Schedule cost of goods sold

Beginning finished goods	36000
Cost of goods manufactured	699000
Cost of goods available for sale	735000
Ending finished goods	74000
Unadjusted cost of goods sold	661000
Less: over applied overhead	-12000
Adjusted cost of goods sold	649000

3) Schedule of cost of goods manufactured

Direct material
Beginning raw material	57000
Raw material purchase	265000
Raw material available for use	322000
Less; Ending raw material	-32000
Direct material used		290000
Direct labor		23000
Manufacturing overhead applied		372000
Total manufacturing cost		685000
Beginning work in process		40000
Total cost of work in process		725000
Ending work in process		26000
Cost of goods manufactured		699000