Discon Corporation manufactures a popular doll called Teardrops. Last year the company started with 10,000 dolls, produced 240,000 dolls, and ended the year with 8,000 dolls. Each doll was sold for $20. The actual unit cost for Teardrops is given below:

Direct material.......................................$ 2.00
Direct labour.............................................0.50
Variable overhead....................................2.50
Fixed overhead.........................................7.00
Total unit cost.......................................$12.00

The only selling expenses were a commission of $2 per unit sold and advertising amounting to $350,000. Administrative expenses, all fixed, equaled $270,000. There were no beginning and ending work-in-process inventories.

Required:

1. Identify the conceptual errors, if any, in the quarterly income statement presented above.

2. Prepare a cost of goods manufactured statement for the quarter.

3. Prepare a revised income statement for the quarter.

1. Prepare an income statement.

2. Calculate the following per unit costs:

a. Prime cost

b. Conversion cost

c. Variable cost