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 $1,438,500 on a media campaign for Sweet Sadie and $432,000 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	$1.60
Cover	0.50
Song lyric insert	0.50

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 960 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 $0.20 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 $35 per record store. In addition, shipping costs average $0.20 per record.

Total completed production was 411,000 records during the year. Other information is as follows:

Line Item Description	Amount
Number of customers (music stores)	17,500
Number of records sold	349,400
Wholesale price (to music store) per record	$14

Factory overhead cost is applied to jobs at the rate of $480 per copy machine hour. There were an additional 102,750 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 processSales			$Sales
Cost of goods soldFinished goodsGross profitMaterialsSalesCost of goods sold			Cost of goods sold
Cost of goods soldFactory overheadGross profitMedia campaignShipping expensesGross profit			$Gross profit
Selling expenses:
Factory overheadFinished goodsLegal expensesMedia campaignWork in processMedia campaign	$Media campaign
Factory overheadLegal expensesPromotional materialsSalesWork in processPromotional materials	Promotional materials
Cost of goods soldFactory overheadFinished goodsLegal expensesShipping expensesShipping expenses	Shipping expenses
Total selling expenses		$Total selling expenses
Administrative expenses:
Factory overheadLegal expensesMedia campaignPromotional materialsShipping expensesLegal expenses		Legal expenses
Total operating expenses			Total operating expenses
Operating income			$Operating income
Manufacturing cost per unit (record):
Direct materials:
Blank recordDirect laborFactory overheadSalesShipping expensesBlank record		$Blank record
CoverFactory overheadPromotional materialsSalesShipping expensesCover		Cover
Factory overheadLegal expensesMedia campaignPromotional materialsSong lyric insertSong lyric insert		Song lyric insert
Total direct materials			$Total direct materials
Cost of goods soldDirect laborPromotional materialsShipping expensesStory booklet and stuffed animalDirect labor			Direct labor
Factory overheadJewel caseLegal expensesPromotional materialsSalesFactory overhead			Factory overhead
Total manufacturing cost per record			$Total manufacturing cost per record