PROBLEM 222 Schedule of Cost of Goods Manufactured; Income Statement [LO1, LO2, LO3, LO4] Cost and sales information for the most recent fiscal year are shown below:

Required: 1. Prepare a schedule of cost of goods manufactured. 2. Prepare an income statement. 3. Assume that the company produced 10,000 units of product during the year. What was the average cost per unit for direct materials? What was the average cost per unit for factory depreciation? 4. Assume that the company expects to produce and sell 15,000 units of product during the coming year. What average cost per unit and what total cost would you expect the company to incur for direct materials and for factory depreciation at this level of activity? Assume that raw materials costs charged by suppliers will not change next year. For factory depreciation, assume that the company uses straight-line depreciation and that the factory equipment has five years of useful life remaining. 5. Explain any difference in the average cost per unit between requirements (3) and (4) above.

WALLACE RIVER COMPANY Cost and Sales Information For the Year Ended December 31 Purchases of raw materials Raw materials inventory, beginning . . Raw materials, ending. Depreciation, factory. . . Insurance, factory Direct labour Maintenance, factory. Administrative expense. Sales Utilities, factory Supplies, factory Selling expense Advertising expense Indirect labour, factory Work in process inventory, beginning. Work in process inventory, ending . . Finished goods inventory, beginning Finished goods inventory, ending $90,000 10,000 17,000 42,000 5,000 60,000 30,000 70,000 450,000 27,000 1,000 80,000 20,000 65,000 7,000 30,000 10,000 40,000