The following data is available for Crater Corporation?s North American division for the years 2014 and 2015. During these years there were no inventories in the system.

Required:

1. Classify the expense items by behaviour (based on the number of units produced/sold) and by function (manufacturing, sales/marketing, and administration). Write the amount for each item using 2015 data.

2. What were the total amounts for product costs and period costs during 2015? Classify the product costs as direct or indirect.

3. Prepare an income statement in good form for the year 2015. Compute the gross margin per unit for the year.

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2015 2014 Production quantity 40,000 44,000 Number of customers 12,600 11,000 Revenues $23,200,000 $24,640,000 Expenses Direct materials & components $3,200,000 $3,533,200 Direct production wages (1) $1,448,000 $1,590,600 Production supervisory salaries $261,400 $238,100 Salaries paid to sales representatives (2) $548,000 $569,600 Advertising $675,300 $568,400 Insurance (3) $115,670 $110,600 Building rent (4) $258,640 $256,800 Other salaries (5) $1,160,000 $1,232,000 $430,200 Honorarium to the members of the board $430,200 Production quality control (6) $130,650 $135,870 $346,200 Market research $303,160 Depreciation (7) $1,326,700 $1,168,900 Facilities management (8) $884,230 $746,200 Legal $685,600 $618,200 $196,500 Personnel department $194,200 Utilities-production (9) $852,600 $762,700 $360,340 $301,500 Utilities-other (10) Customer service (11) $917,400 $924,600 $13,797,430 $13,684,830