1. Income Statement and Supporting Schedules.The following financial information is for Caravelli Company. (Note that the most current financial information is presented in the first column.)

   December 31, 2016	December 31, 2015
   Raw materials inventory	$ 24,000	$ 30,000
   Work-in-process inventory	1,800,000	1,650,000
   Finished goods inventory	1,050,000	1,230,000

   Of the total raw materials placed in production for the year, $36,000 was for indirect materials. The company had $3,795,000 in sales for the year ended December 31, 2016. The company also had the following costs for the year:

   Selling	$ 270,000
   General and administrative	$ 720,000
   Raw materials purchases	$ 300,000
   Direct labor used in production	$ 375,000
   Manufacturing overhead	$1,890,000

   Required:
   1. Prepare a schedule of raw materials placed in production for the year ended December 31, 2016.
   2. Prepare a schedule of cost of goods manufactured for the year ended December 31, 2016.
   3. Prepare a schedule of cost of goods sold for the year ended December 31, 2016.
   4. Prepare an income statement for the year ended December 31, 2016.
   5. Describe the three types of costs included in cost of goods sold on the income statement. (Dollar amounts are not necessary in your descriptions.)