Question 2 (12 marks) The information below has been taken from the cost records of Purple Company for the past year: Direct materials used in production: $1,250,000. Direct labour cost: $2,000,000. Manufacturing overhead applied: $2,800,000. Selling and administrative expenses: $1,000,000. The beginning inventory balances of the year and ending inventory balances at the end of the year were as follows: Direct materials Inventory Work in process Inventory Finished goods Inventory Required: Beginning Balance $130,000 $250,000 $300,000 Ending Balance $80,000 $400,000 $200,000 1. What was the cost of direct materials purchased for the past year? 2. What was the cost of goods manufactured for the past year? 3. What was the cost of goods sold for the past year? 4. If the sales revenue for the past year was $10,000,000 what was Purple Company's net profit for the past year? Prepare an income statement to show your calculations. 5. The accountant of Purple Company has become aware that the actual manufacturing overhead for the past year was $2,200,000. What is Purple Company's corrected (actual) cost of goods sold for the past year? 6. What is the impact on Purple Company's net profit for the past of the closing of the under- or over-applied overhead to the cost of goods sold? Show all calculations. (2 +2 +2 +2 +2 + 2 = 12 marks)