Gateway Construction Company Income Statement For the Year Ended December 31, 2017 Sales (18,200 equipment hours @ $165 per hour) $3,003,000 Less expenses: Utilities $ 24,000 Machine operators 218,000 Rent, office building 24,000 CPA fees 20,000 Other direct labor 265,700 Administrative salaries 114,000 Supervisory salaries 70,000 Pipe 1,401,340 Tires and fuel 418,600 Depreciation, equipment 198,000 Salaries of mechanics 50,000 Advertising 15,000 Total expenses 2,818,640 Operating income $ 184,360 Required: 1. Classify the costs in the income statement as (1) costs of laying pipe (production costs), (2) costs of securing contracts (selling costs), or (3) costs of general administration. For production costs, identify direct materials, direct labor, and overhead costs. The company never has significant work in process (most jobs are started and completed within a day). 2. Assume that a significant driver is equipment hours. Identify the expenses that would likely be traced to jobs using this driver. Explain why you feel these costs are traceable using equipment hours. What is the cost per equipment hour for these traceable