Wallis Company manufactures only one product and uses a standard cost system. The company uses a predetermined plantwide overhead rate that relies on direct laborhours as the allocation base. All ofthe company's manufacturing overhead costs are fixedit does not incur any variable manufacturing overhead costs. The predetermined overhead rate is based on a cost formula that estimated $2,919,000 offixed manufacturing overhead for an estimated allocation base of 29i,900 direct laborhours. Wallis does not maintain any beginning or ending work in process inventory. The company's beginning balance sheet is as follows: Wallis Company Balance Sheet 1f1fxx (dollars in thousands) Assets Cash $ 690 Raw materials inventory 340 Finished goods inventory 460 Property, plant, and equipment, net 10,400 Total assets $ 12,090 Liabilities and Equity Retained earnings $ 12,090 Total liabilities and equity $ 121999 The company's standard cost card for its only product is as follows: (1) Standard Standard Quantity (2) Cost Inputs or Hours Standard Price or Rate (1) x (2) Direct materials 2 pounds $ 33.86 per pound $ 67.66 Dir'ect labor 3.66 hours $ 14.66 per hour 42.66 Fixed manufacturing overhead 3.66 hours $ 16.66 per hour 36.66 Total standard cost per unit $ 1-39-69 During the year Wallis completed the following transactions: a. Purchased {with cash) 239,500 pounds of raw material at a price of $31.40 per pound. Added 219,750 pounds of raw material to work in process to produce 96,900 units. c. Assigned direct labor costs to work in process. The direct laborers (who were paid in cash] worked 248,800 hours at an average cost of $16.00 per hour to manufacture 96,900 units. d. Applied fixed overhead to work in process inventory using the predetermined overhead rate multiplied by the number of direct laborhours allowed to manufacture 96,900 units. Actual fixed overhead costs for the year were $2,749,500. Of this total, $1,359,000 related to items such as insurance, utilities, and salaried indirect laborers that were all paid in cash and $1,390,500 related to depreciation of equipment. e. Transferred 96 _900 units from work in process to finished goods. f. Sold (for cash) 93, 900 units to customers at a price of $170 per unit. g. Transferred the standard cost associated with the 93, 900 units sold from finished goods to cost of goods sold. h. Paid $2,129,500 of selling and administrative expenses. i. Closed all standard cost variances to cost of goods sold. 57 Req 1 Req 2 and 3 Req 4 Prepare Wallis Company's income statement for the year. (Enter your dollars in thousands rounded to the nearest thousand.) Sales 0 $15,963,000 9 Cost of goods sold at standard 0 13,108.440 6 Total variance adjustments (55,810) 6 Cost of goods sold 0 13,052,630 6 Gross margin 0 2,910.370 Selling and administrative expenses 0 2,1295% 6 Net operating income 0 $ 780,8?0 Required: 1. Compute all direct materials, direct labor, and fixed overhead variances for the year. 2. Record transactions a through / for Wallis Company. 3. Compute the ending balances for Wallis Company's balance sheet. 4. Prepare Wallis Company's income statement for the year.