During 2022, Wildhorse Corp. produced 38,720 units and sold 38,720 for $15.00 per unit. Variable manufacturing costs were $6.00 per unit. Annual fixed manufacturing overhead was $77,440 ($2.00 per unit). Variable selling and administrative costs were $2.00 per unit sold, and fixed selling and administrative expenses were $19,360. Suppose the accountant for Wildhorse Corp. uses normal-absorption costing and uses the budgeted volume of 48,400 units to allocate the fixed overhead rather than the actual production volume of 38,720 units. The company expenses production volume variance to cost of goods sold in the accounting period in which it occurs.

(a)Prepare a normal-absorption-costing income statement for the first year of operation.

RafaelCorp. Income Statement-Normal-Absorption Costing For the Year Ended December 31, 2022 Sales $ 600000 Cost of goods sold Beginning inventory $ i Add V: Costs of goods manufactured Cost of goods sold Add V: Volume variance Gross margin 400000 Less V: Selling and administrative expenses 100000 i Operating income $