Henry Company had the following activities during 2018: Beginning inventory: Direct materials Work-in-process Finished goods $ 20,000 800 24,000 During 2018: Purchases of direct materials Direct manufacturing labor Manufacturing overhead 61,600 16,000 12,000 Ending inventory: Direct materials Work-in-process Finished goods 10,400 4,000 16,000 Required: a. What is the cost of direct materials used during 2018? (1 mark) b. What is cost of goods sold for 2018? (2 marks) c. Henry Company produces two products, Product A and Product B, and adopts a traditional overhead cost allocation policy, using direct labor hours as the cost allocation basis for its manufacturing overhead. It also adopts a pricing policy based on 120% markup on total production cost. The Sales Director asked for a performance bonus in view of significant increase in the total number of products sold during the year. However, the financial reports of the company showed that the profitability of Henry Company dropped during the year. Explain how a top-selling product may result in losses for Henry Company. (2 marks)