XYZ Manufacturing Inc. has the following data for the fiscal year ending December 31, 2023:

1. Initial Balances and Transactions:
   • Beginning balances: Cash $30,000, Raw Materials Inventory $50,000, Work in Process Inventory $20,000, Finished Goods Inventory $40,000, Accounts Payable $25,000, Retained Earnings $115,000.
   • Purchased raw materials for $75,000 on account.
   • Issued $60,000 of raw materials to production (80% direct materials, 20% indirect materials).
   • Incurred direct labor costs of $50,000 and indirect labor costs of $15,000.

1. Overhead and Production:
   • Applied manufacturing overhead at a rate of 150% of direct labor cost.
   • Completed goods costing $120,000 and transferred them to finished goods inventory.
   • Sold goods costing $100,000 for $150,000 on account.

1. Adjustments:
   • Actual manufacturing overhead incurred was $80,000.
   • Depreciation on factory equipment was $10,000.
   • Accrued utilities expense for the factory of $3,000.

Tasks:

1. Journal Entries:
   • Prepare journal entries for all transactions and adjustments listed above.

1. Cost of Goods Manufactured:
   • Prepare a schedule of Cost of Goods Manufactured.

1. Financial Statements:
   • Prepare an income statement for the year ending December 31, 2023.

1. Variance Analysis:
   • Calculate the overhead variance and explain its significance.

1. Discussion:
   • Discuss the impact of under-applied or over-applied overhead on the financial statements.