1) Using the information provided in Exhibit 2; prepare a memo to the client explaining how you would go about classifying the various resources as presented. Explaining includes providing a clear rationale for the classifications with specific examples from ESF to classify resources consumed into manufacturing overhead, direct materials, direct labor, selling, and administration.

Exhibit 2

Drafted ESFs Statement of Operating Income for Ended December 31, 2020
Sales	$ 3,114,160
Salesroom Utilities and Fuel	6,491
Office Equipment Depreciation	8,400
Other Administrative Expenses	11,548
Factory Miscellaneous Components	13,142
Manufacturing Maintenance Supplies	17,373
Production Cleaning Supplies	24,993
Manufacturing Maintenance	25,224
Property Taxes - Factory	25,520
Amortization - Factory Machinery	28,555
Office Maintenance	38,718
Shipping Costs	42,893
Furniture Accessories	46,013
Salesroom Building Depreciation	48,600
Fibber Filling	50,856
Promotional Materials	120,283
Factory Building Insurance	62,013
Salesroom Property Taxes and Insurance	65,283
Amortization-Factory Building	68,750
Advertising	71,852
Factory Utilities	81,417
Production Supervisor Salary	90,000
Salespeople Travel	92,788
Warehouse Wages	152,817
Sales Staff Commissions	249,133
Timber furniture components	311,416
Administrative Wages	368,000
Production payroll	934,248
Total Expenses and Costs	3,056,326
Operating Income	$ 57,834