Superior Company provided the following data for the year ended December 31 (all

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 $ 210,000

Purchases of raw materials $ 265,000

Direct labor ? Administrative expenses $ 155,000

Manufacturing overhead applied to work in process $ 371,000

Actual manufacturing overhead cost $ 356,000

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

The total manufacturing costs for the year were $680,000; the cost of goods available for sale totaled $720,000; the unadjusted cost of goods sold totaled $666,000; and the net operating income was $36,000. 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.)

Beginning of Year End of Year Raw Materials 54,000 36,000 Work in Process 31,000 Finished Goods 39,000

Explanation / Answer

Raw material consumed: Beginning Inventory of RM 54000 Add: Purchases 265000 Material available for use 319000 Less: Ending Inventory of RM 36000 Raw material consumed: 283000 Direct Labor cost: Total Manufacturing Cost 680000 Less: Material consumed 283000 Less: Mmanufacturing OH applied 371000 Direct Labor cost: 26000 Beginning WIP inventory: Cost of Goods available for sale 720000 Less: Beginning Inventory of FG 39000 Costt of Goods manufactured 681000 Add: Ending Inventory of WIP 31000 712000 Less: TotaL manufacturing Cost 680000 Beginning Inventory of WIP 32000 Under/Over-applied OH: Manufacturing OH incurred 356000 Manufacturing OH applied 371000 OH over-applied 15000 Sales Revenue:; Cost of goods sold unadjusted 666000 Less: Over-applied OH 15000 Cost of Goods sold Adjusted 651000 Add: Selling expense 210000 Add: Admin Expense 155000 Total cost 1016000 Add: Operating profits 36000 Sales Revenue:; 1052000 Schedule of Cost of Goods manufactured: Beginning Inventory of WIP 32000 Current cost incurred: Beginning Inventory of RM 54000 Add: Purchases 265000 Material available for use 319000 Less: ending Inventory of RM 36000 Material used 283000 Direct labor 26000 Manufacturing OH applied 371000 Total Current cost of Manufacturing 680000 Total cost of Goods manufacturing 712000 Less: Ending Inventory of Wip 31000 Cost of Goods manufactured 681000 Schedule of Costt of Goods sold: Beginning inventory of FG 39000 Add: Cost of Goods manufactured 681000 Cost of Goods available for sale 720000 Less: Ending Inventory of FG (720000-666000) 54000 Unadjusted COGS 666000 Less: Over-applied OH 15000 Adjusted COGS 651000 Income Statement: Sales revenue 1052000 Less: Adjusted COGS 651000 Gross Margin 401000 Less: Selling expense 210000 Less: Admin expense 155000 Operating Profits 36000

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.