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	$	212,000
Purchases of raw materials	$	267,000
Direct labor		?
Administrative expenses	$	153,000
Manufacturing overhead applied to work in process	$	380,000
Actual manufacturing overhead cost	$	360,000

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

	Beginning			Ending
Raw materials	$	54,000		$	39,000
Work in process		?		$	28,000
Finished goods	$	32,000			?

The total manufacturing costs added to production for the year were $685,000; the cost of goods available for sale totaled $720,000; the unadjusted cost of goods sold totaled $669,000; and the net operating income was $37,000. 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.

NEED TO ANSWER:

	Superior Company Income Statement Sales Cost of goods sold Gross margin 0 Selling and administrative expenses: Selling expenses $212,000 Administrative expenses 153,000 365,000

Complete this question by entering your answers in the tabs below.

• Income Statement
• COGS Schedule
• COGM Schedule

Prepare a schedule of cost of goods sold.

	Superior Company Schedule of Cost of Goods Sold Beginning finished goods inventory Add: Cost of goods manufactured Cost of goods available for sale Less: Ending finished goods inventory Unadjusted cost of goods sold Less: Overapplied overhead Adjusted cost of goods sold

Complete this question by entering your answers in the tabs below.

• Income Statement
• COGS Schedule
• COGM Schedule

Prepare a schedule of cost of goods manufactured.

Superior Company Schedule of Cost Goods Manufactured Direct materials: Beginning raw materials inventory $54,000 Add: Purchases of raw materials 267,000 Total raw materials available Less: Ending raw materials inventory Direct materials used in production Direct labor Manufacturing overhead applied to work in process Total manufacturing costs added to production Total manufacturing costs to account for 0 Less: Ending work in process inventory Cost of goods manufactured

Answer 1

Requirement 1 Superior Company Income Statement For the year ended December 31 Sales (37000+365000+649000) Less- Cost of Goods sold (669000-20000) Gross Margin Less-Selling and administrative expenses Selling expenses Administrative expenses Total Selling and administrative expenses Net Operating Income $ $ $ 1,051,000 (649,000) 402,000 $ $ 212,000 153,000 $ $ 365,000 37,000 Requirement 2 Superior Company Schedule of Cost of Goods sold For the year ended December 31 Beginning Finished Goods Add-Cost of goods manufactured (720000-32000) Cost of Goods available for sale Less-Ending finished goods (720000-669000) Unadjusted Cost of Goods sold Less-Overapplied manufacturing Overhead (380000-360000) Adjusted Cost of Goods sold $ $ $ $ $ $ 32,000 688,000 720,000 (51,000) 669,000 (20,000) 649,000 $ 31,000 Requirement 3 Superior Company Schedule of Cost of Goods Manufactured For the year ended December 31 Beginning Work in Process (688000+28000-685000) Direct Materials: Beginning Raw Materials $ 54,000 Add-Purchase of raw materials $ 267,000 Total raw materials available for use $ 321,000 Less- Ending raw materials $ (39,000) Direct Materials used $ Direct Labor (685000-380000-282000) $ Applied Manufacturing Overhead $ Total Manufacturing costs added to production Total manufacturing costs to account for Less- Ending Work in Process Cost of Goods manufactured 282,000 23,000 380,000 $ $ $ $ 685,000 716,000 (28,000) 688,000