Terra Cotta Designs manufactures custom tiles. The following information relates to the fiscal year ending December 31, 2008.

Required
a. Prepare a schedule of cost of goods manufactured. Assume that there are no indirect material costs.
b. Prepare an income statement for fiscal 2008. Ignore income taxes.

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Ending balance in Work in Process Beginning balance in Raw Material Inventory Purchases of raw material Ending balance in Raw Material Inventory Beginning balance in Work in Process Direct labor cost $ 300,000 900,000 100,000 500,000 250,000 2,000,000 Manufacturing overhead applied 500,000 Beginning balance in Finished Goods 600,000 Ending balance in Finished Goods Sales 250,000 6,000,000 Selling expenses 300,000 General and administrative expenses 750,000