Required:

Prepare a manufacturing statement for the Superior Company for 2013.

The following information was taken from the accounting records of the Superior Company:

Depreciation of equipment...............................................	$ 70,000
Direct labor.......................................................................	120,000
Factory taxes....................................................................	2,000
Goods in process inventory, Dec. 31, 2013........................	250,000
Indirect labor....................................................................	10,000
Power...............................................................................	16,000
Raw materials inventory, Dec. 31, 2013............................	60,000
Raw materials purchases, for year...................................	230,000
Goods in process inventory, January 1, 2013....................	302,000
Raw materials inventory, January 1, 2013........................	110,000

1. Explain the conceptual difference between total manufacturing costs and cost of goods manufactured.

2. The factory overhead account must be adjusted at the end of an accounting period. Explain why this adjustment is needed and the consequences to the financial statements if the adjustment is not made. .