Review the Enriquez illustration, especially Exhibit 14.2 on p. 634. Prepare an income statement for 20X1 through the gross profit line. Use the immediate write-off method for overapplied or underapplied overhead.

Exhibit 14.2

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Material purchases €1,900,000 Direct labour €390,000 Factory overhead: € 95,000 280,000 BALANCE SHEET *Ending balance Direct-material inventory €120,000* €1,890,000 Work-in-process inventory €155,000* €375,000 17,000 €392,000 Incurred and accounted for Applied Underapplied €2,500,000 Finished goods inventory €32,000* INCOME STATEMENT Sales Cost of goods sold Underapplied Overhead Adjusted cost of goods sold Gross profit €4,000,000 €2,480,000 17,000 €2,497,000 €1,503,000