queend2838
07.07.2020 • Business
• College
Superior Company provided the following data for the year ended December 31 (all raw materials
are used in production as direct materials):
Selling expenses $ 140,000
Purchases of raw materials $ 290,000
Direct labor ?
Administrative expenses $ 100,000
Manufacturing overhead applied to work in process $ 285,000
Total actual manufacturing overhead costs $ 270,000
Inventory balances at the beginning and end of the year were as follows:
Beginning of Year End of Year
Raw materials $ 40,000 $ 10,000
Work in process ? $ 35,000
Finished goods $ 50,000 ?
The total manufacturing costs for the year were $683,000; the cost of goods available for sale totaled $740,000; the unadjusted cost of
goods sold totaled $660,000; and the net operating income was $30,000. The company’s overapplied or underapplied overhead is
closed entirely to Cost of Goods Sold.
Required:
a. Prepare a schedule of cost of goods manufactured.
b. Prepare a schedule of cost of goods sold.
c. Prepare an income statement for the year.
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abiolataiwo2015
a. The schedule of cost of goods manufactured is $690,000
b. The schedule of cost of goods sold is $645,000
c. The income statement for the year is $30,000
a. Superior Company Schedule of cost of goods manufactured
For year ended December 31
Direct materials:
Beginning inventory of raw materials $40,000
Raw material purchases $290,000
Raw materials available for use $330,000
($40,000+$290,000)
Less Ending inventory of raw materials ($10,000)
Direct materials used $320,000
($330,000-$10,000)
Direct labor $78,000
Manufacturing overhead applied $285,000
Total manufacturing costs $683,000
($320,000+$78,000+$285,000)
Add beginning WIP $42,000
Total cost of work in process $725,000
($683,000-$42,000)
Less Ending WIP ($35,000)
Cost of goods manufactured $690,000
($725,000-$35,000)
b. Superior Company Schedule of cost of goods sold For year ended December 31
Beginning finished goods inventory $50,000
Add Cost of goods manufactured $690,000
Cost of goods available for sale $740,000
($50,000+$740,000)
Less Ending finished goods inventory ($80,000)
Unadjusted Cost of goods sold $660,000
($740,000-$80,000)
Less Over applied overhead ($15,000)
Adjusted cost of goods sold $645,000
($660,000-$15,000)
c. Superior Company Income Statement
For year ended December 31
Sales revenue $915,000
Less Cost of goods sold $645,000
Gross profit $270,000
($915,000-$645,000)
Less Selling Expenses ($140,000)
Less Administrative Expenses ($100,000)
Operating Income $30,000
($270,000-$140,000-$100,000)
Inconclusion The schedule of cost of goods manufactured is $690,000; The schedule of cost of goods sold is $645,000 and The
income statement for the year is $30,000.
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andromache
Answer and Explanation:
The Preparation of cost of goods manufactured is shown below:Statement of Cost of Good Manufactured
Particulars
Amount
Direct Material
Beginning Inventory a
$40,000
Purchases b
$290,000
Direct material available
$330,000
(c = a + b)
Ending direct material
inventory d
$10,000
Direct Material used
$320,000
(e = c - d)
Direct Labor
$398,000
($683,000 - $285,000 - $320,000)
Factory Overhead
$285,000
Total Manufacturing Cost
$683,000
Add: Beginning WIP Inventory
$42,000
($690,000 + $35,000 - $683,000)
Less: Ending WIP Inventory
$35,000
Cost of goods manufactured
$690,000
b and c The Preparation of schedule of cost of goods sold and income statement for the year is prepared below:Schedule of cost of goods sold
Income statement for the year
Particulars
Amount
Sales
$915,000
($270,000 + $645,000)
Cost of goods sold
Beginning inventory of
finished product
$50,000
Cost of goods manufactured $690,000
Cost of goods available
for sales
$740,000
Less:Ending finished good
inventory
$80,000
($740,000 - $660,000)
Cost of goods sold
(Unadjusted)
$660,000
Over-applied Overhead
$15,000
($285,000 - $270,000)
Cost of goods sold (Adjusted)
$645,000
($660,000 - $15,000)
Gross profit
$270,000
($30,000 + $100,000 + $140,000)
Less: Selling & Administrative Expenses
Selling Expenses
$140,000
Administrative expenses
$100,000
Operating income
$240,000
$30,000
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