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Below is financial information for Campus Fashion Inc. (The Company) for the year ended December 31, 2018 prepared by its inexperienced accountant. Campus Fashion Inc.

Below is financial information for Campus Fashion Inc. (The Company) for the year ended December 31, 2018 prepared by its inexperienced accountant.

Campus Fashion Inc.

Income Statement

at December 31, 2018

Revenues:





Sales revenue



$ 300,000

Dividend Revenues



1,800

Sales commission payable


1,000

Allowance for Uncollectable accounts

2,000

Royalty Revenue



500

Gain on sale of office equipment


1,500

Total revenues



306,800

Less: Cost of goods manufactured


(243,100)

Gross profit



63,700

Operating expenses:




Selling



30,000


General and administrative

34,000


Restructuring Cost


6,000


Short-term investments

5,400


Dividend paid


600


Interest expense


2,000


Total operating expenses


78,000

Net loss




(14,300)


Campus Fashion Inc.

Schedule of Cost of Goods Manufactured

at December 31, 2018

Direct materials purchased



$ 100,000



Direct manufacturing labor



43,000



Manufacturing overhead:






Indirect materials



$ 3,000




Factory Bonus Payable


(2,500)




Indirect manufacturing labor costs

13,000




Factory Equipment



48,000




Research and development expense

6,000




Factory rent



18,000




Prepaid Factory insurance


600




Repair of Delivery truck


400




Factory Insurance



2,000




Other Indirect manufacturing costs

4,600




Factory utilities



7,000




Total manufacturing overhead



100,100



Cost of goods manufactured



$ 243,100




The accountant did not take the following items into consideration when preparing the statements above.

a. Factory equipment was purchased on July 1, 2018 and has a useful life of 5 years with $2,000 salvage (residual) value.

The company uses the straight-line method of depreciation

b. Inventory balances for 2018 are:

The company’s tax rate is 21%
The company’s president is disappointed with the results of operations and has hired your accounting firm to review the financial statements.


Required:

1. As one step in gathering data for the president, prepare a revised schedule of cost of goods manufactured for the perido ended December 31, 2018.

2. As a second step, prepare a corrected multiple-step income statement for the year ended December 31, 2018.

3. Calculate the cost of producing one unit if the compan produced 50,000 units in 2018.

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