Gathman Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The company's balance sheet at the beginning of the year was as follows: Gathman Corporation Balance Sheet January 1 Assets Cash Raw materials inventory Finished goods inventory Property, plant, and equipment (net) Total assets Liabilities and Equity Retained earnings Total liabilities and equity $ 999,120 27,780 72,995 784,290 $ 1,884,185 $ 1,884,185 $ 1,884,185 The standard cost card for the company's only product is as follows: Standard Quantity or Hours 1.8 pounds Standard Price or Rate $5.00 per pound 0.7 hours $ 23.00 per hour Fixed manufacturing overhead 0.7 hours $ 5.50 per hour Standard Cost $ 9.00 16.10 3.85 Inputs Direct materials Direct labor Total standard cost per unit $ 28.95 The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $77,000 and budgeted activity of 14,000 hours. During the year, the company completed the following transactions: a. Purchased 22,300 pounds of raw material at a price of $4.70 per pound. b. Used 23,140 pounds of the raw material to produce 12,800 units of work in process. c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 9,960 hours at an average cost of $22.00 per hour. d. Applied fixed overhead to the 12,800 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $132,810. Of this total, $28,080 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $104,730 related to depreciation of manufacturing equipment. e. Transferred 12,800 units from work in process to finished goods. f. Sold for cash 12,600 units to customers at a price of $61.10 per unit. g. Completed and transferred the standard cost associated with the 12,600 units sold from finished goods to cost of goods sold. h. Paid $73,470 of selling and administrative expenses. i. Closed all standard cost variances to cost of goods sold.