Premium Watches, Inc. produces and sells children's smart watches. The company started the year 2018 with 1,500 watches and produced an additional 75,132 watches. The income statement below was prepared by the company's inexperienced accountant. Premium Watches Inc. Income Statement As at December 31, 2018 $269,500 4,000 1,200 500 Sales revenue (67,500 watches) s Royalty revenue ls Interest payable... Total revenue $276,700 Less operating expenses: Utilities 9,200 Direct materials purchased . 95,000 .. . 27,000 . 34,700 Selling expense... Administrative expense 30,900 4,000 500 Short-term investment. Dividend paid. 327.300 Total operating expenses Net operating loss a. Sixty five percent (65%) of utilities and 70% of insurance expense related to factory operations. Apply the remaining amounts equally to selling expense and administrative expense. b. Ninety percent (90%) of the rent expense is associated with factory operations, Allocate the remaining 10% equally to selling expense and administrative expenses. Factory equipment is estimated to have a useful life of 5 years with a $5,000 salvage value remaining at the end of its useful life. The company uses the straight-line method of depreciation. d. Inventory balances at the beginning and ending of the period were: January, 2018 December 31,2018 7,000 $12,000 $9,000 goods$3,750 These amounts were not taken into account when the statements were prepared. e. The company's tax rate is 21%. The president is disappointed with the results of operations and has asked you to review the income statement and make a recommendation as to whether the company should look for a buyer for its assets. Required Prepare a schedule of cost of goods manufactured for the year ended December 31, 2018. Prepare a corrected multiple-step income statement for the year ended December 31, 2018. Calculate the cost of producing one watch if the company produced 110,000 watches in 2018 (round your answer to two decimal points). 1. 2. 3