R-Tunes Inc. is in the business of developing, promoting, and selling musical talent online and with compact discs (CDS). The company signed a new group, called Cyclone Panic, on January 1, 20Y8. For the first six months of 20Y8, the company spent $2,194,500 on a media campaign for Cydlane Panic and $658,000 in legal costs. The D production began on April 1, 20Y8. R-Tunes uses a job ordier cost system to accumulate costs associated with a CD title. The unit direct materials cost for the CD is: Blank CD $1.60 Case 0.50 Song lyric insert 0.50 The production process is straightforward. First, the blank CDs are brought to a production area where the digital soundtrack is copied onto the CD. The copying machine can copy 1,500 CDs per hour. After the CDs are copied, they are brought to an assembly are whtere an employee packs the CD with a case and song lyric insert. The direct labor cost is $0.20 per CD. The CDs are sold to record stores. Each record store is given promotional materials, such as posters and aisle displeys. Promotional materials cost $35 per store. In addition, shipping costs average $0.20 per CD. Tatal compieted production was 627,000 units during the year. Other information is as folows: Number of customers (record stores) 26,600 Number of CDs sold 53,000 Wholesale price (to record store) per CD $14 Factory overhead cost is applied to jobs at the rate of $750 per copy machine hour. There were an additional 156,750 copied CDs, packages, and inserts waiting to be assembied on December 31, 20Y8. Instructions: 1. Prepare an annual income statement for the Cyclane Panic D, including supporting calculations, from the information above. Round unit costs to the nearest cent, if rounding is required. R-Tunes Inc. Cyclone Panic CD Income Statement For the Year Ended December 31, 20Y8 Sales Cost of goods sold Gross profit Seling expenses: Total selling expenses Administrative expenses Legal expenses Tatal operating expenses Income from operations Manufacturing cnst per unt (D): Direct materials: Total direct materials Total merufaduring cost per O 2. Determine the balances in the work-in-process and finished goods inventories for the Cyclone Panic CD on December 31, 20Y8. When performing intermediate calculations, round unit costs to the nearest cent. Finished Goods balance, December 31, 20Y8 Work in Process balance, December 31, 20Y8