perior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): Selling expenses $ 211,000 Purchases of raw materials $ 269,000 Direct labor ? Administrative expenses $ 154,000 Manufacturing overhead applied to work in process $ 378,000 Actual manufacturing overhead cost $ 359,000 Inventory balances at the beginning and end of the year were as follows: Beginning Ending Raw materials $ 53,000 $ 34,000 Work in process ? $ 28,000 Finished goods $ 33,000 ? The total manufacturing costs added to production for the year were $680,000; the cost of goods available for sale totaled $730,000; the unadjusted cost of goods sold totaled $668,000; and the net operating income was $36,000. The company’s 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.)

Direct labor = $14,000

Beginning Work in process = $45,000

Ending Finished goods = $62,000

Explanation:

Note: See the attached excel file for the schedules of cost of goods manufactured and cost of goods sold and an income statement.

Also note: The following workings are used in the excel file:

Workings:

w.1: Direct labor = Total manufacturing costs for the year - Total raw materials used in production - Manufacturing overhead applied to work in process = $680,000 - $288,000 - $378,000 = $14,000

w.2: Cost of goods manufactured = Cost of goods available for sale -  Beginning finished goods =   $730,000 - $33,000 = $697,000

w.3: Total cost of work in process = Cost of goods manufactured + Ending work in process = $697,000 + $28,000 = $725,000

w.4: Beginning work in process = Total cost of work in process - Total manufacturing cost = $725,000 - $680,000 = $45,000

w.5: Ending finished goods = Cost of goods available for sale - Unadjusted cost of goods sold = $730,000 - $668,000 = $62,000

w.6: Overapplied overhead = Manufacturing overhead applied to work in process - Actual manufacturing overhead cost = $378,000 - $359,000 = $19,000

w.7: Gross profit = Net operating income + Selling expenses + Administrative expenses = $36,000 + $211,000 + $154,000 = $401,000

w.8: Sales = Adjusted cost of goods sold + Gross profit = $687,000 + $401,000 = $1,088,000

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