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 Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost $ 140,000 $ 290,000 100,000 $ 285, 000 $ 270,000 Inventory balances at the beginning and end of the year were as follows Beginning of Year End of Year Raw materials Work in process Finished goods $40,000 10,000 ? 35,000 $ 50,000 The total manufacturing costs for the year were $683,000; the cost of goods available for sale totaled $740,000; the unadjusted cost of goods sold totaled $660,000; and the net operating income was $30,000. 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.)

Explanation / Answer

Solution:

Schedule of cost of goods manufactured - Superior company Particulars Amount Direct materials ($40,000 + $290,000 - $10,000) $320,000.00 Direct labor (Bal fig) $78,000.00 Manufacturing overhead Applied $285,000.00 Manufacturing cost incurred during period $683,000.00 Add: Beginning WIP (Bal Fig) $42,000.00 Less: Ending WIP $35,000.00 Cost of goods manufactured $690,000.00

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