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

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

Selling expenses	$	216,000
Purchases of raw materials	$	267,000
Direct labor		?
Administrative expenses	$	155,000
Manufacturing overhead applied to work in process	$	371,000
Actual manufacturing overhead cost	$	351,000

Inventory balances at the beginning and end of the year were as follows:

	Beginning of Year			End of Year
Raw materials	$	55,000		$	37,000
Work in process		?		$	25,000
Finished goods	$	34,000			?

The total manufacturing costs for the year were $685,000; the cost of goods available for sale totaled $750,000; the unadjusted cost of goods sold totaled $661,000; and the net operating income was $35,000. 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.)

Prepare an income statement for the year.

 

 Prepare a schedule of cost of goods sold.

 

 Prepare a schedule of cost of goods manufactured.

 Schedule of cost of goods sold:

Less: Overapplied overhead ($351,000 – $371,000) = $20,000


Income statement:

Cost of goods sold ($661,000 – $20,000) = $641,000