You are engaged in the audit of the December 31, 2010, financial statements of Epworth Products Corporation. You are attempting to verify the costing of the work-in-process and finished goods ending inventories that were recorded on Epworth’s books as follows:

 

				Units	Cost
Work-in-process inventory				300,000	$660,960
	Materials	100%	complete
	Labor & Overhead	50%	complete
Finished Goods				100,000	$504,900

Materials are added to production at the beginning of the manufacturing process, and overhead is applied to each product at the rate of 60 percent of direct labor costs. There was no finished goods inventory on January 1, 2010. Epworth uses the FIFO costing method. A review of Epworth’s 2010 inventory cost records disclosed the following information:

 

				Units	Materials Cost	Labor Cost
Work-in-process inventory, January 1, 2007
	Labor & Overhead	80%	complete	200,000	$200,000	$315,000
Started				1,000,000
Completed				900,000
Current period costs					$1,300,000	$1,995,000
Ovh application rate (% of direct labor cost)			60%

Required

Prepare a production cost report to verify the inventory balances and prepare necessary journal entries to correctly state the inventory of finished goods and work-in-process, assuming that the books have not beenclosed.