ETech Company was organized on January 1, 2017 to produce and sell a revolutionary smart watch. At the beginning of its second year (2018) finished goods inventory was 2,000 watches. During 2018 E Tech accountant resigned and the accounting was done by an accounting student who worked part-time for the company. The income statement below was prepared by the accounting student. ETech Company Income Statement As of December 31, 2018 Revenues: Sales revenue (38,000 watches)........... $1,140,000 Royalty revenue... 500 Gain on sale of trading investment.. 7,000 Deferred rent revenue 3,500 Interest payable... 3,700 Total revenues ......... $1,154,700 Operating expenses: Cost of goods manufactured. $1,113,000 Selling and distribution expense. 195,000 95,000 General and administrative expense..... Restructuring costs.......... 25,000 17,000 Short-term investments....... Interest expense...... 5,000 Dividend paid........... 1.000 1.451,000 Total operating expenses ...... ($296,300) Net loss ...... 360,000 79,000 ETech Company Schedule of Cost of Goods Manufactured As of December 31, 2018 Purchase of direct materials.......... Direct manufacturing labor costs ... Indirect Manufacturing Overhead: Factory maintenance........ Factory insurance ........ Indirect manufacturing labor costs............ Rent expense ...... Utilities expense.... Research & development expense............. Prepaid factory insurance............... Factory equipment ............. Accumulated depreciation - factory equipment ..................... Total indirect manufacturing overhead........ Cost of goods manufactured ....... $35,000 3,000 105,000 84,000 30,000 15,000 2,000 500,000 (100,000) 674,000 $1,113,000 Additional information about the company's activities during the year is as follows: a. In 2018 the company produced 40,000 watches. b. Inventories at the beginning and end of the year were as follows: January 1, 2018 December 31, 2018 Direct materials.............. $8,000 $10,000 Work in process ................. $25,200 49,000 Finished goods ... $37,800 c. Seventy five percent (75%) of rent expense relates to manufacturing, 15% to general and administrative expense and 10% to selling and distribution expense. Also, 90% of utilities expense relates to manufacturing, 6% to general and administrative expense and 4% to selling and distribution expense. d. Factory equipment was purchased January 2, 2017 and is estimated to have a useful life of 10 years with a $5,000 salvage value remaining at the end of its useful life. The company uses the double- declining-balance method of depreciation. The accumulated depreciation of $100,000 reported in the Schedule of Cost of Goods Manufactured resulted from 2017 factory equipment depreciation. No depreciation was charged for 2018. e. The company's tax rate is 21 %. The company's CEO is concemed about the large net loss and hires your accounting firm to review the above financial statements. Required: 1. Prepare a corrected Schedule of Cost of Goods Manufactured for the year ended December 31, 2018. 2. Prepare a revised multiple-step income statement for the year ended December 31, 2018. 3. Calculate the cost of producing one watch (show calculation)