Manufacturing cost flow for one-year period Mikhail Manufacturing started 2007 with the following account balances.

Transactions during 2007 1. Purchased $750 of raw materials with cash.
2. Transferred $500 of raw materials to the production department.
3. Incurred and paid cash for 80 hours of direct labor was at $7.50 per hour.
4. Applied overhead costs to Work in Process Inventory. The predetermined overhead rate is $7.50 per direct labor hour.
5. Incurred actual overhead costs of $650 cash.
6. Completed work was on 300 units for $3.60 per unit.
7. Paid $200 in selling and administrative expenses in cash.
8. Sold 200 units for $1,500 cash revenues. (Assume LIFO cost flow.)
Mikhail charges overapplied or underapplied overhead directly to Cost of Goods Sold.
Required

a. Record the preceding events in a horizontal statements model. Also designate the classification of cash flows using the letters OA for operating activities, IA for investing activities, and FA for financing activities. The beginning balances are shown as an example.

b. Prepare a schedule of cost of goods manufactured and sold, an income statement, a balance sheet, and a statement of cash flows for 2007.