Award: 35.00 points Problem 3-13 Schedules of Cost of Goods Manufactured and Cos

Question

Award: 35.00 points Problem 3-13 Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement LO3-3] Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materiáls): Selling expenses $ 210,000 $ 268,000 Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Actual manufacturing overhead cost S 153,000 $ 368,000 $ 355,000 Inventory balances at the beginning and end of the year were as follows: Beginning of Year End of Year Raw materials S 53,000 34,000 Work in process ? 24,000 Finished goods $ 39,000 The total manufacturing costs for the year were $680,000; the cost of goods available for sale totaled $730,000; the unadjusted bost of goods sold totaled $667,000, 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.) Complete this question by entering your answers in the tabs below.

Explanation / Answer

Schedule of cost of goods manufactured: 29000 $ $ Direct materials used: 688000 Beginning balance,RM inventory 53000 717000 Add:Purchases of raw materials 268000 685000 Total raw materials available 321000 32000 Less:Ending balance,RM inventory 34000 Direct materials used 287000 Direct labor (Note:1) 25000 Manufacturing overhead applied 368000 Total manufacturing costs 680000 Add: Beginning balance of work in process ( Note:2) 35000 715000 Less: Ending balance of work in process 24000 Cost of goods manufactured 691000 Schedule of cost of goods sold: $ Beginning balance of finished goods 39000 Add: Cost of goods manufactured 691000 Cost of goods available for sale 730000 Less: Ending balance of finished goods (Note:3) 63000 Unadjusted cost of goods sold 667000 Less:Over applied overhead (Note:4) 13000 Adjusted cost of goods sold 654000 Income statement: $ $ Sales (Note:6) 1049000 Less: Cost of goods sold 654000 Gross margin (Note:5) 395000 Less: Selling and administrative expense Selling expenses 210000 Administrative expenses 153000 363000 Net operating income 32000 Note:1 Computation of Direct labor Direct material used+Direct labor+Manufacturing overhead=Total manufacturing cost Direct labor=Total manufacturing cost-Direct material used-Manufacturing overhead=680000-287000-368000=$ 25000 Note:2 Computation of beginning balance of work in process inventory Ending balance of work in process 24000 Add: Cost of goods transferred to finished goods Cost of goods available for sale 730000 Less: Beginning balance of finished goods 39000 691000 715000 Less:Total manufacturing costs 680000 Beginning balance of work in process 35000 Note:3 Computation of ending balance of Finished goods inventory Ending balance of finished goods=Cost of goods available for sale-Unadjusted cost of goods sold=730000-667000=$ 63000 Note:4 Computation of over applied overhead Overapplied overhead=Manufacturing overhead applied-Actual manufacturing overhead costs=368000-355000=$ 13000 Note:5 Computation of gross margin Net operating income=Gross margin-Selling and Administrative expense Gross margin=Net operating income+Selling and Administrative expense=32000+363000=$ 395000 Note:6 Computation of sales Gross margin=Sales-Cost of goods sold Sales=Gross margin+Cost of goods sold=395000+654000=$ 1049000

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