QUESTION 3 Syarikat Perkilangan Mesra (SPM) is a manufacturing company that just started their business in 2019. The following Income Statement is prepared by a newly appointed accountant, who has no prior working experience. Syarikat Perkilangan Mesra Unadjusted Income Statement for the year ended 31 December 2019 RM RM Net sales 975,000 (Cost of goods sold Purchase 345.000 Direct labour 168,750 Indirect labour 67 500 Depreciation on machine 37 500 Rent expense JON 000 Insurance expense 12.000 Utilities expense 21.000 Administrative expense 34.500 Miscellaneous manufacturing overhead 25,950 Other operating expense 250 350 Cost of goods sold 1,070.550 Gross income (loss) (95.550) After several checks, the management is aware that the Income Statement prepared by the new accountant is wrong. Below is the information collected in order to correct the unadjusted income statement. 1. Utilities, rent and insurance expense are 40% applied to factory. 2. The inventories as at 31 December 2019 are as follows: Direct materials RM28.500 Work in process RM7,500 Finished goods RM82,800 REQUIRED: (a) Calculate: Conversion cost c) Cost of goods sold (b) Differentiate between product cost and period cost