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 $ 214,000 $ 270,000 $ 158,000 $ 371,000 $352,000 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 $ 50,000 33,000 31,000 $ 40,000 The total manufacturing costs for the year were $685,000; the cost of goods available for sale totaled $740,000; the unadjusted cost of goods sold totaled $666,000; and the net operating income was $32,000. 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

Schedule of Cost of Goods Manufactured Direct materials: Raw materials inventory, beginning 50000 Add: Purchases of raw materials 270000 Total raw materials available 320000 Deduct: Raw materials inventory, ending 33000 Raw materials used in production 287000 Direct labor 27000 Manufacturing overhead applied to work in process inventory 371000 Total manufacturing costs 685000 Add: Beginning work in process inventory 46000 731000 Deduct: Ending work in process inventory 31000 Cost of goods manufactured 700000 Schedule of Cost of Goods Sold Finished goods inventory, beginning 40000 Add: Cost of goods manufactured 700000 Cost of goods available for sale 740000 Deduct: Finished goods inventory, ending 74000 Unadjusted cost of goods sold 666000 Less: Overapplied overhead 19000 Adjusted cost of goods sold 647000 Income Statement Sales 1051000 Cost of goods sold 647000 Gross margin . 404000 Selling and administrative expenses: Selling expenses 214000 Administrative expense 158000 372000 Net operating income 32000

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