1. **Problem Statement:** Prepare a schedule of cost of goods manufactured (COGM) and the cost of goods sold (COGS) section of the income statement for Superior Company for the year ended December 31. 2. **Given Data:** - Purchases of raw materials = 290000 - Direct labor = unknown (we will find it) - Manufacturing overhead = 270000 - Beginning raw materials inventory = 40000 - Ending raw materials inventory = 10000 - Beginning finished goods inventory = 50000 - Ending work in process inventory = 35000 - Total manufacturing costs = 683000 - Goods available for sale = 740000 - Cost of goods sold = 660000 3. **Formulas and Important Rules:** - Raw materials used = Beginning raw materials + Purchases - Ending raw materials - Total manufacturing costs = Direct materials used + Direct labor + Manufacturing overhead - Cost of goods manufactured = Total manufacturing costs + Beginning work in process - Ending work in process - Goods available for sale = Beginning finished goods + Cost of goods manufactured - Cost of goods sold = Goods available for sale - Ending finished goods 4. **Step-by-step Solution:** **Step 1: Calculate raw materials used** $$\text{Raw materials used} = 40000 + 290000 - 10000 = 320000$$ **Step 2: Calculate direct labor** Given total manufacturing costs = 683000, and total manufacturing costs = Direct materials used + Direct labor + Manufacturing overhead $$683000 = 320000 + \text{Direct labor} + 270000$$ $$\text{Direct labor} = 683000 - 320000 - 270000 = 93000$$ **Step 3: Calculate cost of goods manufactured (COGM)** We know: $$\text{COGM} = \text{Total manufacturing costs} + \text{Beginning WIP} - \text{Ending WIP}$$ Let Beginning WIP = $x$ Goods available for sale = 740000 = Beginning finished goods + COGM $$740000 = 50000 + COGM \Rightarrow COGM = 740000 - 50000 = 690000$$ So: $$690000 = 683000 + x - 35000$$ $$x = 690000 - 683000 + 35000 = 40000$$ **Step 4: Calculate ending finished goods inventory** Cost of goods sold = Goods available for sale - Ending finished goods $$660000 = 740000 - \text{Ending finished goods}$$ $$\text{Ending finished goods} = 740000 - 660000 = 80000$$ **Step 5: Prepare schedule of cost of goods manufactured** - Beginning raw materials: 40000 - Add: Purchases: 290000 - Raw materials available: 330000 - Less: Ending raw materials: 10000 - Raw materials used: 320000 - Direct labor: 93000 - Manufacturing overhead: 270000 - Total manufacturing costs: 683000 - Add: Beginning work in process: 40000 - Less: Ending work in process: 35000 - Cost of goods manufactured: 690000 **Step 6: Prepare cost of goods sold section** - Beginning finished goods: 50000 - Add: Cost of goods manufactured: 690000 - Goods available for sale: 740000 - Less: Ending finished goods: 80000 - Cost of goods sold: 660000 **Final answers:** - Beginning work in process inventory = 40000 - Ending finished goods inventory = 80000 - Direct labor = 93000 - Cost of goods manufactured = 690000 - Cost of goods sold = 660000