Ehrlich Company had the following inventory balances at the beginning and end of the year:

January 1 December 31

Raw material $60,000 $50,000

Work in proces 140,000 180,000

Finished goods 280,000. 255,000

During the year, the company purchased $100,000 of raw material and incurred $340,000 of direct labor costs.

Other data: manufacturing overhead incurred, $440,000; manufacturing overhead applied, $450,000

Sales, $1,560,000;

Selling and administrative expenses, $90,000;

Income tax rate, 30%.

Required: A. Calculate cost of goods manufactured.

B. Calculate cost of goods sold.

C. Determine Ehrlich's net income. (prepare an income statement)