Below is Salem Companys income statement for 2018 that was prepared by an inexperienced accountant. Salem Company Income Statement As of December 31, 2018 Revenues:

Sales revenue .. $298,000

Wages payable.... 4,000

Gain on sale of investment.. 5,250

Deferred revenue. 2,500

Interest payable 1,000

Accumulated depreciation 10,000

Total revenues .. $320,750

Less operating expenses:

Selling expenses. . $32,250

Research and development expense... 4,750

Prepaid advertising .. 3,000

Indirect manufacturing labor cost.. 16,200

Utilities expense... ..................... 10,200

Direct manufacturing labor cost. .. 41,000

Factory equipment.. 40,000

Insurance expense.. 3,500

Restructuring costs.. 4,000

Direct materials purchased..... 93,000

Interest expense. 1,750

Rent expense.... .. 18,000

Other factory indirect costs. 3,000

Dividend paid. 1,500

Administrative expenses.. 40,400

Short-term investment . 19,000

Total operating expenses .. 331,550

Net operating loss .. ($10,800)

a. Seventy percent (70%) of utilities expense and 80% of insurance expense are for factory operations. Apply the remaining utilities and insurance expenses equally to selling expense and administrative expenses.

b. Sixty percent (60%) of the rent expense is associated with factory operations. Allocate the remaining rent equally to selling expense and administrative expenses.

c. Factory equipment was purchased January 1, 2017. It was estimated that the useful life of the equipment is 10 years and the residual value, $4,000. The $10,000 accumulated depreciation above is for 2017. No depreciation was charged for 2018. The company uses the double-declining balance method of depreciation.

d. Inventory balances are: January 1, 2018 December 31, 2018

Direct materials $5,000 $6,600

Work-in-process .. $8,000 $10,000

Finished goods $25,000 $28,000

e. The companys tax rate is 21%. The president is disappointed with the results of operations and has asked you to review the income statement and make a recommendation as to whether the company should look for a buyer for its assets. Required:

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

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

3. Calculate the cost of producing one unit if the company produced 120,000 units in 2018 (round your answer to two decimal points).