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): Selling expenses $ 216,000 Purchases of raw materials $ 269,000 Direct labor ? Administrative expenses $ 157,000 Manufacturing overhead applied to work in process $ 333,000 Total actual manufacturing overhead costs $ 357,000 Inventory balances at the beginning and end of the year were as follows: Beginning of Year End of Year Raw materials $ 50,000 $ 32,000 Work in process ? $ 31,000 Finished goods $ 39,000 ? The total manufacturing costs for the year were $675,000; the cost of goods available for sale totaled $725,000; the unadjusted cost of goods sold totaled $661,000; and the net operating income was $33,000. The company’s overapplied or underapplied overhead is closed entirely to Cost of Goods Sold.

Prepare a schedule of cost of goods manufactured.

Prepare a schedule of cost of goods sold.

Required:

Explanation / Answer

Working Note

Sales 1043000 Beginning Raw Material Inventory 50000 Purchase of Raw Materials 269000 Raw Material Available 319000 Less: Ending Raw Material Inventory -32000 Raw Material Transferred to Production 287000 Direct Labour: 675000-333000-287000 55000 Manufacturing Overhead Applied 333000 Total Manufacturing Cost 675000 Beginning Work in Process Inventory 42000 Less: Ending Work in process Inventory -31000 Cost of Goods Manufactured 686000 Beginning Finished Goods Inventory 39000 Cost of Goods available for sales 725000 Ending Finished Goods Inventory -64000 Unadjusted cost of goods sold 661000 Less: Overapplied Manufacturing Overhead -24000 Adjusted Cost of Goods Sold 637000 Gross Profit: 1043000-637000 406000 Selling Expenses 216000 Administrative Expense 157000 Net Operating Income: (406000-216000-157000) 33000 Net Operating Income 33000

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