Question 2 (37 minutes, 22 marks) Road Building Equipment Company is a small company that manufactures specialty heavy equipment for use in Alberta road building. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labour hours. At the beginning of the current year, the following estimates were made to compute the predetermined overhead rate: manufacturing overhead cost $448,000; direct labour hours 25,600 and direct labour cost $640,000. During the year the company purchased $295,000 of raw materials on credit. Sales commissions are 2.25% of sales and the corporate income tax rate is 12%. Selected adjusted "T" accounts for the year ended Janaury 31, 2020 are as follows: opening RAW MATERIALS $24.000 $295.000 $300.000 $19,000 ending opening direct materials direct labour applied overhead unadjusted ending WORK IN PROCESS $46,000 $240,000) $700,000 $1,434,000 $490.000 $42,000 $295 $41,705 adjustment adjusted ending opening FINISHED GOODS $68,000 $1,434,000 $1,442,000 $60.000 $405 adjustment $59,595 unadjusted ending COST OF GOODS SOLD $1,442,000 $9,300 adjustment adjusted ending $1,432,700 utilities indirect materials indirect labour insurance depreciation MANUFACTURING OVERHEAD SALES $65,000 $1,800,000 $60.000 $283,750 $11.250 $490.000 applied overhead OPERATING EXPENSES $60.000 commissions $40,500 $480,000 salaries $75,000 $10.000 insurance $4,200 $490.000 depreciation $32.500 adjustment $152,200 REQUIRED: 1. Prepare a schedule of cost of goods manufactured for the year ended January 31, 2020. 2. Prepare an income statement for the year ended January 31, 2020. 3. Explain briefly why the Work in Progress, Finished Goods and Cost of Goods Sold accounts have adjusted ending balances