Retro Pop Inc. is in the business of developing, promoting, and selling musical talent online and with records. The company signed a new group, called Sweet Sadie, on January 1, 20Y8. For the first six months of 20Y8, the company spent $1,368,000 on a media campaign for Sweet Sadie and $410,000 in legal costs. The record production began on April 1, 20Y8.

Retro Pop uses a job order cost system to accumulate costs associated with a record title. The unit direct materials cost for the record is:

Line Item Description	Amount
Blank record	$2.00
Cover	0.70
Song lyric insert	0.70

The production process is straightforward. First, the blank records are brought to a production area where the digital soundtrack is copied onto the record. The copying machine can copy 720 records per hour.

After the records are copied, they are brought to an assembly area where an employee packs the record in a cover with a song lyric insert. The direct labor cost is $0.30 per record.

The records are sold to music stores. Each music store is given promotional materials, such as posters and aisle displays. Promotional materials cost $45 per record store. In addition, shipping costs average $0.30 per record.

Total completed production was 304,000 records during the year. Other information is as follows:

Line Item Description	Amount
Number of customers (music stores)	12,900
Number of records sold	258,400
Wholesale price (to music store) per record	$18

Factory overhead cost is applied to jobs at the rate of $360 per copy machine hour. There were an additional 76,000 copied records, covers, and inserts waiting to be assembled on December 31, 20Y8.

Instructions:

Question Content Area

1. Prepare an annual income statement for the Sweet Sadie record, including supporting calculations, from the information above. Round unit costs to the nearest cent, if rounding is required.

Line Item Description	Amount	Amount	Amount
Cost of goods soldFactory overheadGross profitSalesWork in process			$- Select -
Cost of goods soldFinished goodsGross profitMaterialsSales			- Select -
Cost of goods soldFactory overheadGross profitMedia campaignShipping expenses			$- Select -
Selling expenses:
Factory overheadFinished goodsLegal expensesMedia campaignWork in process	$- Select -
Factory overheadLegal expensesPromotional materialsSalesWork in process	- Select -
Cost of goods soldFactory overheadFinished goodsLegal expensesShipping expenses	- Select -
Total selling expenses		$Total selling expenses
Administrative expenses:
Factory overheadLegal expensesMedia campaignPromotional materialsShipping expenses		- Select -
Total operating expenses			Total operating expenses
Operating income			$Operating income
Manufacturing cost per unit (record):
Direct materials:
Blank recordDirect laborFactory overheadSalesShipping expenses		$- Select -
CoverFactory overheadPromotional materialsSalesShipping expenses		- Select -
Factory overheadLegal expensesMedia campaignPromotional materialsSong lyric insert		- Select -
Total direct materials			$Total direct materials
Cost of goods soldDirect laborPromotional materialsShipping expensesStory booklet and stuffed animal			- Select -
Factory overheadJewel caseLegal expensesPromotional materialsSales			- Select -
Total manufacturing cost per record			$Total manufacturing cost per record

Question Content Area

2. Determine the balances in the work-in-process and finished goods inventories for the Sweet Sadie record on December 31, 20Y8. When performing intermediate calculations, round unit costs to the nearest cent.

Line Item Description	Amount
Finished Goods balance, December 31, 20Y8	fill in the blank 1 of 2$
Work in Process balance, December 31, 20Y8	fill in the blank 2 of 2$

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