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
Less: Overapplied overhead ($351,000 – $371,000) = $20,000
Income statement:
Cost of goods sold ($661,000 – $20,000) = $641,000
