One spring, Jake and Chad Driller decided to earn money providing professional athletic coaching and training services. As the business has grown, they have expanded into product sales and recreation related construction projects. They are currently contracting with several recreation facilities across the state to design and build volleyball courts. They are six months into the planning and production of the courts and the information for the current month, August, is as follows: Beginning balance Ending balance Raw materials $9,000 $5,000 Work in process $23,000 $37,950 Finished goods $43,500 $47,450 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 18,000 machine-hours and incur $324,000 in manufacturing overhead cost. The following transactions were recorded for the year: 1.Raw materials were purchased, $82,000. 2.Raw materials were requisitioned for use in production, $86,000 ($64,000 direct and $22,000 indirect). 3. The following employee costs were incurred: direct labor, $72,000; indirect labor, $17,000; and executive salaries, $21,000. 4.Selling costs, consisting of commissions for a contracted sales staff and advertising, $45,000. 5.Factory utility costs, $4,000. 6.Depreciation for the month was $26,000 of which $18,000 is related to factory operations and the rest is related to selling, general, and administrative activities. 7. Manufacturing overhead was applied to jobs. The actual level of activity for the month was 2,900 machine-hours. 8. Sales for the month totaled $331,000. The company completed and sold 7 courts in August. Required: a. Prepare the journal entries for the transactions above and any other transactions needed to complete the job cost process. b. Prepare a schedule of cost of goods manufactured in good form. c. Was the overhead underapplied or overapplied? By how much? Prepare a journal entry to close any balance in the manufacturing overhead account to cost of goods closed. d. Prepare an income statement for the current month in good form based on the information given for the construction projects only. Include in your income statement your schedule of cost of goods sold.? 2. The company wants to see its income statement in the contribution format for AUGUST. The Income Statement for July is given below: Sales $156,000 Cost of goods sold 76,329 Gross margin 79,671 Selling and administrative expenses: Selling expense $31,000 Depreciation 8,000 Executive salaries 21,000 60,000 Net operating income $ 19,671 The company completed and sold 3 courts in July. Required: a. Determine which expenses are fixed, variable and mixed and, by use of the high-low method, separate each mixed expense into its variable and fixed components. State the cost formula for each mixed expense. b. Complete the company's contribution format income statement for AUGUST. HINT: Net income should be the same for both income statement formats and only one cost (expense account) is mixed (at this point). Cost of Goods Sold is always variable (for our purposes now)