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 $2,816,000 on a media campaign for Cyclone Panic and $845,000 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 $1.80 Case 0.60 Song lyric insert 0.60 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 1,680 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 $0.25 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 $40 per store. In addition, shipping costs average $0.25 per CD. Total completed production was 704,000 units during the year. Other information is as follows: Number of customers (record stores) 29,900 Number of CDs sold 598,400 Wholesale price (to record store) per CD $16 Factory overhead cost is applied to jobs at the rate of $840 per copy machine hour. There were an additional 176,000 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 704,000 Cost of goods sold Cost of goods sold 3.00 Gross profit $Gross profit Selling expenses: Media campaign $Media campaign 2,816,000 Promotional materials Promotional materials 40 Shipping expenses Shipping expenses 0.25 Total selling expenses $fill in the blank 5b433907806ffda_13 Administrative expenses: Legal expenses Legal expenses 845,000 Total operating expenses fill in the blank 5b433907806ffda_16 Income from operations $fill in the blank 5b433907806ffda_17 Manufacturing cost per unit (CD): Direct materials: Blank CD $Blank CD 0.40 Case Case Song lyric insert Song lyric insert Total direct materials $fill in the blank 5b433907806ffda_24 Direct labor Direct labor Factory overhead Factory overhead Total manufacturing cost per CD $fill in the blank 5b433907806ffda_29 Feedback Area Feedback