Prepare a schedule of cost of goods manufactured. Problem 2-23A Schedules of Cos
ID: 2419379 • Letter: P
Question
Prepare a schedule of cost of goods manufactured. Problem 2-23A Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement [LO2-6] Superior Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials): $216,000 $269,000 Selling expenses Purchases of raw materials Direct labor Administrative expenses Manufacturing overhead applied to work in process Total actual manufacturing overhead costs $158,000 $331,000 $354,000 Inventory balances at the beginning and end of the year were as follows Beginning of Year End of Year Raw materials Work in process Finished goods 60,000 37,000 ? 28,000 $ 33,000 The total manufacturing costs for the year were $685,000; the cost of goods available for sale totaled $740,000; the unadjusted cost of goods sold totaled $668,000; and the net operating income was $39,000. The company's overapplied or underapplied overhead is closed entirely to Cost of Goods Sold.Explanation / Answer
Total manufacturing costs:
= Direct Material + Direct Labor + Direct Overhead
= [Op Material+ Purchases- Cl. Material]+ Direct Labor+ Total actual manufacturing overhead
$685,00=[$60,000+$269,000-$37,000]+Direct Labor+$354,000
$685,000=$292,000+$354,000+ Direct Labor
$685,000=$646,000+ Direct Labor
Direct Labor=$685,000-$646,000
Direct Labor=$39,000
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Computation of Cost of Goods Manufactured:
Cost of Goods Available for Sale= Beginning Finished Goods Inventory+ Cost of Goods Manufactured
$740,000= $33,000+Cost of Goods Manufactured
Cost of Goods Manufactured=$740,000-$33,000=$707,000
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Computation of Opening Work in progess
Cost of Goods manufactured
=Op Wip+ Direct material consumed + Direct labor+ Factory overhead- ending WIP
=Op Wip+ Toal Manufacturing cost- ending WIP
$707,000= Op Wip+$685,000-$28,000
$707,000=Op Wip +$657,000
Op Wip=$707,000-$657,000=$50,000
Computation of overhead over applied or under applied
Manufacturing overhead applied to work in progress..........$331,000
Total actual manufacturing overhead costs..........................$354,000
This Under applied= $354,000-$331,000=$23,000
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Computation cost of Goods sold
adjusted cost of Goods sold=unadjusted cost of Goods sold+ Under applied Overhead
=$668,000+$23,000=$691,000
Computation Ending Finished Goods:
Cost of Goods Available for sale=unadjusted cost of Goods sold+ Ending Finished Goods
$740,000=$668,000+ Ending Inventory
Ending Finished Goods=$740,000-$668,000=$72,000
Sales=Cost of Goods Sold+Selling Exp + Administrative Exp+ Operating Income
=$691,000+$216,000+$158,000+$39,000
=$1,104,000
Statement of Cost of Goods Manufactured
For the Month Ended March 31
Direct Materials
Beginning Inventory
$60,000
Purchases
269,000
Direct Materials Available
329,000
Ending Direct Materials Inventory
-37,000
Direct Materials Used
292,000
Direct Labor
39,000
Factory Overhead
354,000
Total Manufacturing Cost
685,000
Beginning Work-in-Process Inventory
50,000
Total Manufacturing Cost
685,000
Less: Ending Work-in-Process Inventory
28,000
Cost of Goods Manufactured
$707,000
Beginning Finished Goods
33,000
Add: Cost of Goods Manufactured
707,000
Total Cost of Goods available for sale
740,000
Less: Ending Finished Goods
72,000
Unadjusted Cost of Goods sold
668,000
Add: Under Appiled
23,000
adjusted Cost of Goods sold
691,000
Superior Company
Income Statement
For the Month Ended March 31
Sales
$1,104,000
Cost of Goods Sold
Beginning Finished Goods Inventory
33,000
Cost of Goods Manufactured
707,00
Cost of Goods Available for Sale
740,000
- Ending Finished Goods Inventory
72,000
Unadjusted Cost of Goods sold
668,000
Add: Under Appiled
23,000
691,000
Gross Margin
413,000
Selling Expenses
216,000
Administrative Expenses
158,000
Operating Income
39,000
Statement of Cost of Goods Manufactured
For the Month Ended March 31
Direct Materials
Beginning Inventory
$60,000
Purchases
269,000
Direct Materials Available
329,000
Ending Direct Materials Inventory
-37,000
Direct Materials Used
292,000
Direct Labor
39,000
Factory Overhead
354,000
Total Manufacturing Cost
685,000
Beginning Work-in-Process Inventory
50,000
Total Manufacturing Cost
685,000
Less: Ending Work-in-Process Inventory
28,000
Cost of Goods Manufactured
$707,000
Beginning Finished Goods
33,000
Add: Cost of Goods Manufactured
707,000
Total Cost of Goods available for sale
740,000
Less: Ending Finished Goods
72,000
Unadjusted Cost of Goods sold
668,000
Add: Under Appiled
23,000
adjusted Cost of Goods sold
691,000