Flow of Costs and Income Statement R-Tunes Inc. is in the business of developing, promoting, and selling musical talent online and with compact discs (CDs). The company signed a new group, called Cyclone Panic, on January 1, 20Y8. For the first six months of 20Y8, the company spent $1,599,500 on a media campaign for Cyclone Panic and $480,000 in legal costs. The CD production began on April 1, 20Y8. R-Tunes uses a job order cost system to accumulate costs associated with a CD title. The unit direct materials cost for the CD is: Blank CD $1.60 Case 0.50 Song lyric insert 0.50 The production process is straightforward. First, the blank CDs are brought to a production area where the digital soundtrack is copied onto the CD. The copying machine can copy 1,080 CDs per hour. After the CDs are copied, they are brought to an assembly area where an employee packs the CD with a case and song lyric insert. The direct labor cost is $0.20 per CD. The CDs are sold to record stores. Each record store is given promotional materials, such as posters and aisle displays. Promotional materials cost $35 per store. In addition, shipping costs average $0.20 per CD. Total completed production was 457,000 units during the year. Other information is as follows: Number of customers (record stores) 19,400 Number of CDs sold 388,500 Wholesale price (to record store) per CD $14 Factory overhead cost is applied to jobs at the rate of $540 per copy machine hour. There were an additional 114,250 copied CDs, packages, and inserts waiting to be assembled on December 31, 20Y8. Instructions: Question Content Area 1. Prepare an annual income statement for the Cyclone Panic CD, including supporting calculations, from the information above. Round unit costs to the nearest cent, if rounding is required. R-Tunes Inc. Cyclone Panic CD Income Statement For the Year Ended December 31, 20Y8 Sales $Sales 5,439,000 Cost of goods sold Cost of goods sold Gross profit $Gross profit Selling expenses: Media campaign $Media campaign 1,599,500 Promotional materials Promotional materials 679,000 Shipping expenses Shipping expenses 77,700 Total selling expenses $fill in the blank fda7c3009065001_13 2,356,200 Administrative expenses: Legal expenses Legal expenses 480,000 Total operating expenses fill in the blank fda7c3009065001_16 Income from operations $fill in the blank fda7c3009065001_17 Manufacturing cost per unit (CD): Direct materials: Blank CD $Blank CD 1.6 Case Case 0.5 Song lyric insert Song lyric insert 0.5 Total direct materials $fill in the blank fda7c3009065001_24 2.6 Direct labor Direct labor 0.2 Factory overhead Factory overhead 2 Total manufacturing cost per CD $fill in the blank fda7c3009065001_29 Feedback Area Feedback 1. (a) Calculate the sales amount. (b) Calculate the manufacturing cost per unit. Calculate the overhead cost per unit by dividing the rate per copy machine hour by CDs per hour. (c) Multiply the manufacturing cost per unit with the number of units sold. (d) Multiply sales with the commission rate. Question Content Area 2. Determine the balances in the work-in-process and finished goods inventories for the Cyclone Panic CD on December 31, 20Y8. When performing intermediate calculations, round unit costs to the nearest cent. Finished Goods balance, December 31, 20Y8 $fill in the blank 8b757903a036005_1 Work in Process balance, December 31, 20Y8 $fill in the blank 8b757903a036005_2 354,175 Feedback Area Feedback Multiply the number of units in the finished goods inventory with the cost per unit. Multiply the number of units in the work-in-process inventory with the direct materials and factory overhead costs per unit. Feedback Area Feedback Partially correct Check My Work