Chaos Manufacturing had the following financial information for the year ended December 31 2018:

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		1,486,000	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 was 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 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:

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.