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 $212,000 $266,000 $157,000 $ 374,000 $ 355,000 Inventory balances at the beginning and end of the year were as follows Beginning of $ 58,000 $ 39,000 $ 31,000 Year End of Year Raw materials Work in process Finished goods ?31,000 The total manufacturing costs for the year were $680,000; the cost of goods available for sale totaled $735,000; the unadjusted cost of goods sold totaled $662,000; and the net operating income was $35,000. The company's underapplied or overapplied overhead 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

Statement Showing Cost of Goods Manufacture Raw Material incurred Remark Opening Stock $58,000.00 Given Purchase $266,000.00 Given Less: Closing Stock -$39,000.00 $285,000.00 Given Direct Labour $21,000.00 W/n-1 Manufacturing Overhead Applied $374,000.00 Given Total Manufacturing Cost $680,000.00 Given Add: WIP Opening balance $55,000.00 W/N -3 Less: WIP Closing Balance -$31,000.00 $24,000.00 Given Cost of goods Manufactured $704,000.00 W/n-2 Statement Showing Cost of Goods sold Detail Amount Refer Opening Finsihed Goods Stock $31,000.00 Cost of Goods Manufacture $704,000.00 W/ No2 Goods Avialable for Sale $735,000.00 Less : Closing stock of Finshed stock -$73,000.00 W/No-4 Unjusted cost of Goods Sold $662,000.00 Less: Overhead Applied -$19,000.00 W/No-5 Adjusted cost of Goods Sold $643,000.00 Statement Showing Income Statement Detail Amount Refer Sales $1,047,000.00 W/ No-8 Less: Cost of Goods Sold -$643,000.00 Gross Margin $404,000.00 Less: Selling & Administrative expense Selling expense -$212,000.00 Administrative Expense -$157,000.00 Net Operating Income $439,000.00 Working Note 1 Direct Labour = (Total Manufacturing Cost - Manufacturing OH Applied to WIP-Raw material used in production) = ( $680000-$374000-285000) = $21,000.00 2 Cost of goods Manufctured = Cost of gooda available for sale- Finished goods inventory in Beginning ($735000-$31000) $704,000.00 3 Beginning WIP = COG Manufactured + Ending WIP - Total Manufacturing cost $704000+ $31000-$680000 $55,000.00 4 Closing Finshed goods = Cost of Goods available for sale in - Unjusted COGS) = =($735000-$662000) = $73,000.00 5 Overhead Applied = (Manufacturing OH Applied to WIP-Raw material used in production- Total Actual Manufacturing Overhead Cost) = ($374000-$355000) = $19,000.00 6 Adjusted cost of Goods Sold = Unjested cost of Goods Sold- Overhead applied $662000-19000= $643000 7 Gross Margin = Net Income+ Admin Expense+ Selling Expense = =$35000+$157000+ $212000= $404000 8 Sales = Gross Margin+ Adjusted cost of Goods Sold =$404000+$643000= $1047000

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.