325 100 80 Task-2 and 3: Tornado Company items (in millions $): Tornado's costing system uses direct materials, direct labor, and overhead costs. For The Date For The Year 2020 Direct materials inventory, Jan.1,2020 15 Direct materials purchased Work-in-process inventory, Jan.1, 2020 10 Direct Labor Finished goods inventory, Jan 1, 2020 70 Depreciation-plant and Equipment Direct materials inventory, Dec.31,2020 20 Plant supervisory salaries Work-in-process inventory, Dec.31, 2020 5 Miscellaneous Plant Overhead Finished goods inventory, Dec. 31, 2020 55 Revenues Marketing, distribution, Customer service cost Plant supplies used Plant utilities Indirect Labor 5 35 950 240 10 30 60 Requirements: 1. Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31, 2020. (Task-2) 2. How would the answer if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? Be specific. (Task-3) 3. Would the sales manager's salary (included in marketing, distribution, and customer-service costs) be accounted for any differently if the Tornado Corporation were a merchandising sector company instead of a manufacturing-sector company? (Task-3) 4. Using the flow of manufacturing costs outlined in Exhibit 2-7, describe how the wages of an assembler in the plant would be accounted for in this manufacturing company. (Task-3) 5. Plant supervisory salaries are usually regarded as manufacturing overhead costs. When might some of these costs be regarded as direct manufacturing costs? Give an example. (Task-3) 6. Suppose that both the direct materials used, and the plant and equipment depreciation are related to the manufacture of 1 million units of product. What is the unit cost for the direct materials assigned to those units? What is the unit cost for plant and equipment depreciation? Assume that yearly plant and equipment depreciation is computed on a straight-line basis. (Task-3) 7. Assume that the implied cost-behavior patterns in requirement 6 persist. That is, direct material costs behave as a variable cost and plant and equipment depreciation behaves as a fixed cost. Repeat the computations in requirement 6, assuming that the costs are being predicted for the manufacture of 1.2 million units of product. How would the total costs be affected? (Task-3) 8. As a management accountant, explain concisely to the president why the unit costs differed in requirements 6 and 7. (Task-3)