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

Question

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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.

Business

1 answer:

Nady [2.9K] · Answer 1 · 2026-02-18T05:20:23+03:00

Answer and Explanation:

The calculation of the cost of goods manufactured is detailed below:

Statement of Cost of Goods Manufactured

Details Amount

Direct Materials

Initial Inventory a $40,000

Purchases b $290,000

Direct Materials Available $330,000

(c = a + b)

Ending Direct Materials Inventory d $10,000

Direct Materials Used $320,000

(e = c - d)

Direct Labor $398,000

($683,000 - $285,000 - $320,000)

Factory Overhead $285,000

Total Manufacturing Costs $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 the cost of goods sold and income statement for the year is outlined below:

Schedule of Cost of Goods Sold

Income Statement for the Year

Details Amount

Sales $915,000

($270,000 + $645,000)

Cost of Goods Sold

Beginning Inventory of

Finished Products $50,000

Cost of Goods Manufactured $690,000

Cost of Goods Available

for Sale $740,000

Less: Ending Finished Goods

Inventory $80,000

($740,000 - $660,000)

Cost of Goods Sold

(Unadjusted) $660,000

Overapplied 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 $240,000

Operating Income $30,000