Chater 3 Problem

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

Selling expenses	$	217,000
Purchases of raw materials	$	268,000
Direct labor		?
Administrative expenses	$	155,000
Manufacturing overhead applied to work in process	$	372,000
Actual manufacturing overhead cost	$	355,000

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

	Beginning of Year			End of Year
Raw materials	$	58,000		$	31,000
Work in process		?		$	27,000
Finished goods	$	40,000			?

The total manufacturing costs for the year were $675,000; the cost of goods available for sale totaled $720,000; the unadjusted cost of goods sold totaled $661,000; and the net operating income was $34,000. The companys 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.

Superior Company
Income Statement
		0
Selling and administrative expenses:
		0

Prepare a schedule of cost of goods sold.

Superior Company
Schedule of Cost of Goods Sold
Raw materials inventory, beginning
Adjusted cost of goods sold

Prepare a schedule of cost of goods manufactured.

Superior Company
Schedule of Cost Goods Manufactured
Direct materials:
Beginning raw materials inventory	$58,000
Add: Purchases of raw materials	268,000
Total raw materials available	326,000
Less: Ending raw materials inventory	31,000
Raw materials used in production		$295,000
Direct labor		8,000
Manufacturing overhead applied to work in process		372,000
Total manufacturing costs		675,000
Add: Beginning work in process inventory		32,000
Less: Ending work in process inventory		27,000
Cost of goods manufactured		$680,000