1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.1.a. The cost of direct materials used in production includes the beginning materials inventory plus purchases, less the ending materials inventory.b. Total manufacturing costs incurred during December include direct materials, direct labor, and factory overhead.c. The cost of goods manufactured is beginning work in process plus total manufacturing costs less the ending work in process.d. The cost of goods sold is the beginning finished goods plus the cost of goods manufactured, less the ending finished goods.e. Sales minus cost of goods sold equals gross profit.f. Gross profit minus operating expenses equals net income.Use similar relationships from On Company to find the missing amounts for the Off Company items (a) through (f).2. Prepare On Company's statement of cost of goods manufactured for December.2. The cost of goods manufactured is the beginning work in process plus the cost of direct materials used in production plus direct labor and factory overhead, less the ending work in process.3. Prepare On Company's income statement for December.

On off Company Company Materials inventory, December 1 $74,320 $97,360 Materials inventory, December 31 (a) 110,020 Materials purchased 188,770 (a) Cost of direct materials used in production 199,180 (b) Direct labor 280,190 219,060 Factory overhead 86,950 109,040 Total manufacturing costs incurred in December (b) 629,920 Total manufacturing costs 709,010 709,010 Work in process inventory, December 1 142,690 234,640 Work in process inventory, December 31 120,400 (c) Cost of goods manufactured (c) 624,080 Finished goods inventory, December 1 125,600 109,040 Finished goods inventory, December 31 131,550 (d) Sales 1,095,480 973,600 Cost of goods sold (d) 629,920 Gross profit (e) Operating expenses 142,690 (f ) Net income (f ) 216,140