Hewtex Electronics manufactures two products, tape recorders and electronic calculators, and sells them nationally to wholesalers and retailers. The Hewtex management is very pleased with the company's performance for the current fiscal year. Projected sales through December 31, 2022, suggest that 120,000 tape recorders and 190,000 electronic calculators will be sold this year. The projected earnings statement, which follows, shows that Hewtex will not meet its earnings goal of 9% of sales after taxes.

Hewtex now allocates committed costs based on flexible labor costs. A study has determined that committed costs are as follows:

(1) supervisory costs for tape recorder production - $500,000;

(2) supervisory salaries for electronic calculator production - $600,000;

(3) the balance of the committed costs are proportional to the number of batches of production.

Hewtex schedules tape recorders for production in batches of 1,000; and electronic calculators in batches of 10,000. Finally, $300,000 of what was originally classified as facility sustaining cost was actually attributable to tape recorders, and $400,000 was attributable to the electronic calculator line.

Recast the original financial statements to correct the costing errors due to misclassification.

TOTAL (000 omitted) $7,120 HEWTEX ELECTRONICS Projected Earnings Statement For the Year Ended December 31, 2022, 120,000 UNITS TAPE 190,000 UNITS RECORDERS ELECTRONIC CALCULATOR Total Amount Per Unit Total Amount Per Unit (000 omitted) (000 omitted) Sales $1,800 $15.00 $5,320 $28.00 Flexible costs Materials 480 4.00 1,140 6.00 Labor 360 3.00 1,710 9.00 Other 120 1.00 570 3.00 Committed costs 280 2.33 1,400 7.37 Total costs 1,240 10.33 4,820 25.37 Gross Margin 560 4.67 500 2.63 Facility-sustaining costs Net income before income taxes 1,620 2,070 690 1,680 6,060 1,060 2,000 (940)