Superior Company provided the following account balances for the year ended Dece

Question

Superior Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials) $210,000 Selling expenses Purchases of raw materials Direct labor $264,000 $159,000 $335,000 Manufacturing overhead applied to work in process $360,000 End of Year S 60,000 S35,000 7 $28,000 Work in process Finished goods 39,000 The total manufacturing costs for the year were $690,000, the cost of goods available for sale totaled 3750,000 the unadjusted cost of goods sold totaled $661,000, and the net operating income was $31,000 The company's overapplied or underapplied overhead is closed entirely to Cost of Goods Sold (Hint Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.) Required: a. Prepare a schedule of cost of goods manufactured SUPERIOR COMPANY Schedule of Cost Goods Manufactured Direct materials S 60,000 Add Raw materials inventory endin 324.000

Explanation / Answer

Schedule of Cost of Goods sold: Direct Material: Beginning inventory of Rm 60000 Purchases 264000 Raw material available 324000 Less: Ending inventory of Rm 35000 Raw material consumed 289000 Beginning WIP: Direct labour (690000-289000-335000) 66000 Cost of goods available for sale 750000 Manufacturing Overheads applied 335000 Less: Beginning Inventory of FG 39000 Total Manufacturing cost 690000 Cost of goods manufactured 711000 Add: Work in process Beginning inventory 49000 Add: Ending WIP inventory 28000 Total cost of Goods manufacturing 739000 739000 Less: Ending inventory of WIP 28000 Less: Total manufacturing Cost 690000 Cost of Goods manufactured 711000 Beginning WIP inventory 49000 Sschedule of Cost of Goods sold Ending Finished Goods inventory: Finished Goods inventory 39000 Cost of goods available for sale 750000 Add: Cost of goods manufactured 711000 Less: Unadjusted cost of goods sold 661000 cost of goods available for sale 750000 Ending Finished Goods inventory: 89000 Less: ending inventory of FG 89000 Unadjusted cost of goods sold 661000 Under/Overr-applied Overheads: Add: Under-applied Overheads 25000 Total Manufacturing OH incurred 360000 Adjusted cost of goods sold 686000 Less: Manufacturing OH applied 335000 Under-applied OH 25000 Income Statement: Sales revenue 1086000 Sales revenue: Cost of goods sold (Adjusted) 686000 Cost of goods sold unadjusted: 661000 Gross Margin 400000 Add: Under-applied Overheads 25000 Selling and admin expenses: Add: Admin Expenses 159000 Selling expense 210000 Add: Sselling expenses 210000 Admin expenses 159000 Add: Net income 31000 Net Operating income 31000 Sales revenue: 1086000

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