Flow of Costs and Income Statement Technology Accessories Inc. is a designer, manufacturer, and distributor of accessories for consumer electronic products, Early in 2013, the company began production of a leather cover for tablet computers, called the Leather. The cover is made of stitched leather with a velvet interior and fits snugly around most tablet computers. In January, $766,000 was spent on developing marketing and advertising materials. For the first six months of 2013, the company spent an additional $1,401,000 promoting the iLeather. The product was ready for manufacture on January 21, 2013. Technology Accessories Inc uses a job order cost system to accumulate costs for the Leather Direct materials unit costs for the Leather are as follows: Leather $10.00 Velvet 5.00 Packaging 0.40 Total $15.40 The actual production process for the leather is fairly straightforward. First, leather is brought to a cutting and stitching machine. The machine cuts the leather and stitches an exterior edge into the product. The machine requires one hour per 125 Leathers After the Leather is cut and stitched, it is brought to assembly, where assembly personnel affix the elvet interior and pack the Leather for shipping. The direct tabor cost for this work is $0.50 per unit The completed packages are then sold to retail outlets through a soles force. The sales force is compensated by a 20% commission on the wholesale price for all sales a Total completed production was 540,000 units during the year Other information is as follows: Number of leather units sold in 2073 500,000 Wholesale price per unit Factory overhead cost is applied to jobs at the rate of $1,250 per machine hour. There were an additional 21,000 cut and stitched leather waiting to be assembled on December 31, 20Y3 $40 In your computations, if required, round interim per unit costs to two decimal places and final answers to the nearest whole dollar. Required: Required 1. Prepare an annual income statement for the Leather product. Technology Accessories Inc. Income Statement For the Year Ended December 31, 20Y3 Sales 20,000,000 Cost of Goods Sold -12,950,000 Gross Profit 7,050,000 Selling Expenses: Salespersons Commissions 4,000,000 Advertising Design Advertising Expenses Total Selling Expenses Operating income 2. Determine the balances in the finished goods and work in process inventories for the Leather product on December 31, 20Y3. Finished Goods 1,036,000 Work in Process