Exercise 3B-1 (Algo) Overhead Rate Based on Capacity (LO3-6] Wixis Cabinets makes custom wooden cabinets for high-end stereo systems from specialty woods. The company uses a job- order costing system. The capacity of the plant is determined by the capacity of its constraint, which is time on the automated bandsaw that makes finely beveled cuts in wood according to the preprogrammed specifications of each cabinet. The bandsaw can operate up to 189 hours per month. The estimated total manufacturing overhead cost at capacity is $15,309 per month. The company bases its predetermined overhead rate on capacity, so its predetermined overhead rate is $81 per hour of bandsaw use. The results of a recent month's operations appear below: Sales Beginning inventories Ending inventories Direct materials Direct labor Manufacturing overhead incurred Selling and administrative expense Actual hours of bandsaw use $43,710 $ 0 $ 0 $ 5,400 $ 8,860 $14,240 $ 8,240 159 Required: 1-a. Prepare an income statement that records the cost of unused capacity on the income statement as a period expense. 1-b. How much of the cost of unused capacity can be shown on the income statement as a period expense? Answer is not complete. Complete this question by entering your answers in the table below. Required 1A Required 1B Prepare an income statement that records the cost of unused capacity on the income statement as a period expense. Wixis Cabinets Income Statement Sales Cost of goods sold $ 43,710 28,500 $ 15,210 Gross margin Other expenses: Selling and administrative expenses Cost of unused capacity Net operating income $ 8,240 8,240 $ 6,970 Required 1A Required 1B >