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):

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 $745,000; the unadjusted cost of goods sold totaled $663,000; and the net operating income was $32,000. 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.)

Prepare a schedule of cost of goods manufactured.

Prepare a schedule of cost of goods sold.

Superior Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials):

Explanation / Answer

Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning 51000 Add: Purchases of raw materials 262000 Total raw materials available 313000 Deduct: Raw materials inventory, ending 37000 Raw materials used in production 276000 Direct labor 71000 Manufacturing overhead applied to work in process inventory 333000 Total manufacturing costs 680000 Add: Beginning work in process inventory 56000 736000 Deduct: Ending work in process inventory 24000 Cost of goods manufactured 712000 Schedule of Cost of Goods Sold Finished goods inventory, beginning 33000 Add: Cost of goods manufactured 712000 Cost of goods available for sale 745000 Deduct: Finished goods inventory, ending 82000 Unadjusted cost of goods sold 663000 Add: Underapplied overhead 20000 Adjusted cost of goods sold 683000 Income Statement Sales 1088000 Cost of goods sold 683000 Gross margin . 405000 Selling and administrative expenses: Selling expenses 214000 Administrative expense 159000 373000 Net operating income 32000

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