Chaos Manufacturing had the following financial information for the year ended December 31 2022 During the year, the budgeted and actual costs were as follows: Sales for the year were $1,500,000 Note 1 - Raw material Budget: 90% of raw materials are traced directly to specific jobs, and the remaining 10% of raw materials are related to production but are untraceable to specific jobs Actual: during the year $20,000 worth of materials were used in the production process but were untraceable. The rest of the materials used in the production process were directly traceable and applied to WIP as Direct Materials. During the year $180,000 worth of raw materials were purchased Note 2 - labour Budget: Direct Labour $200,000 + Factory Salaries $80,000+ Sales and Marketing Salaries $160,000= $440,000 Actual: Direct Labouc $170,000 + Factory Salaries $85,000 + Sales and Marketing Salaries $163,000= $418,000 During the year $180,000 worth of raw materials were purchased Note 2-Labeuc Budget: Direct Labouc $200,000+ Factory Salaries $80,000+ Sales and Marketing Salaries $160,000= $440,000 Actual: Direct Labouc $170,000+ Factory Salaries $85,000+ Sales and Marketing Salaries $163,000= $418,000 Note 3 - Building Rent The building is all for the manufacturing facility Note 4 - Utilities Electrical For both budget and actual costs, 95% of these costs are related to the factory, and 5% of these costs are related to the administrative office. Note 5 -Shipping Budget: 20% of budgeted shipping costs were for the delivery of raw materials to the manufacturing facility, and the remaining 80% of the shipping costs are for the delivery of finished goods to customers. Actual: All of the shipping costs were for the delivery of finished goods to customer. Note 6 -Overhead Overhead is applied based on Direct labeuc costs Required: Part 1 Based on Normal Costing, show the T-accounts for the three Inventory Accounts (Raw Materials, WIP, Finished Goods) and for Manufacturing Overhead. Prepare an income statement. You may either include the schedules of Cost of Goods Manufactured and Cost of Goods Sold as part of the Income Statement or as separate schedules. Part 2 The company is unsure how to treat under/over applied overhead. Explain which options the company can use to allocate any under/over applied overhead. Identify which option you chose and why it was chosen. (Note: when you see a question that asks for your opinion, the best approach is to first identify each possible option and then analyze each option by explaining the benefits/drawbacks to each option. Finally, make a recommendation based on your analysis.)