Chaos Manufacturing had the following financial information for the year ended December 31 2019: Inventory Balances: Beginning Ending Work in Progress $ 90,000 $ 80,000 Finished Goods $ 77,000 $ 67,000 Raw Materials $ 10,000 $ 10,000 During the year, the budgeted and actual costs were as follows: Note Budget Actual Raw Materials 1 300,000 290,000 Labour 2 540,000 518,000 Depreciation Factory Equipment 72,000 72,000 Depreciation Office Equipment 24,000 24,000 Building Rent 3 100,000 100,000 Maintenance Factory Equipment 64,000 40,000 Utilities Electrical 4 200,000 180,000 Utilities - Gas 5 100,000 90,000 Sales Commissions 40,000 30,000 Advertising 30,000 20,000 Shipping 6 20,000 16,000 Total 1,490,000 1,380,000 Sales for the year were $1,500,000 Note 1 Raw material For both budget and actual materials: 90% of raw materials are traced directly to specific jobs, and the remaining 10% of raw materials are used throughout the production process and not traced. $290,000 in materials were purchased in the year. Note 2 Labour Budget: Direct Labour $300,000 + Factory Salaries $80,000 + Head Office Salaries $160,000 = $540,000 Actual: Direct Labour $270,000 + Factory Salaries $85,000 + Head Office Salaries $163,000 = $518,000 Note 3 Building Rent The building is shared between the factory and the administrative office. 68% of the building is related to the factory, and the remaining 32% is related to the administrative office. Note 4 Utilities Electrical For both budget and actual, 90% of these costs are related to the factory, and 10% of these costs are related to the administrative office. Note 5 Utilities - Gas All of the Gas is used to heat production equipment. Note 6 Shipping All of the shipping costs are to ship finished goods to customers Note 7 Manufacturing Overhead The manufacturer uses Normal Costing. Overhead is allocated based on Direct Labour costs. Any under/over applied overhead is allocated to Cost of Goods Sold.

Required: Show the T-accounting for Manufacturing Overhead for the year Prepare an income statement. You may include a schedule of Cost of Goods Manufactured and Cost of Goods Sold as separate schedules or as part of the Income Statement.

Paragraph Styles Note 2 - Labour Budget: Direct Labour $300,000+ Factory Salaries $80,000+ Head Office Salaries $160,000 - $540,000 Actual: Direct Labour $270,000+ Factory Salaries $85,000 + Head Office Salaries $163,000 - $518,000 Note 3 - Building Rent The building is shared between the factory and the administrative office. 68% of the building is related to the factory, and the remaining 32% is related to the administrative office. Note 4 - Utilities Electrical For both budget and actual, 90% of these costs are related to the factory, and 10% of these costs are related to the administrative office. Note 5 - Utilities - Gas All of the Gas is used to heat production equipment. Note 6 - Shipping All of the shipping costs are to ship finished goods to customers Note 7 - Manufacturing Overhead The manufacturer uses Normal Costing. Overhead is allocated based on Direct Labour costs. Any under/over applied overhead is allocated to Cost of Goods Sold. applied overhead is allocated to Cost of Goods Sold. ect Labour costs. Any under/over Required: Show the T-accounting for Manufacturing Overhead for the year Prepare an income statement. You may include a schedule of Cost of Goods Manufactured and Cost of Goods Sold as separate schedules or as part of the Income Statement