Superior Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials):
Selling expenses $ 214,000
Purchases of raw materials $ 263,000
Direct labor ?
Administrative expenses $ 151,000
Manufacturing overhead applied to work in process $ 337,000
Total actual manufacturing overhead costs $ 358,000
Inventory balances at the beginning and end of the year were as follows:
Beginning of Year End of Year
Raw materials $ 50,000 $ 36,000
Work in process ? $ 26,000
Finished goods $ 38,000 ?
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 $669,000; and the net operating income was $32,000. The company’s overapplied or underapplied overhead is closed entirely to Cost of Goods Sold.
(Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)
Required:
a. Prepare an income statement for the year.