Flow of Costs and Income Statement R-Tunes Inc. is in the business of developing, promoting, and...

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Flow of Costs and Income Statement R-Tunes Inc. is in the business of developing, promoting, and selling musical talent online and with compact discs (CDs). The company signed a new group, called Cyclone Panic, on January 1, 2018. For the first six months of 2018, the company spent $2,605,500 on a media campaign for Cyclone Panic and $782,000 in legal costs. The CD production began on April 1, 2018. R-Tunes uses a job order cost system to accumulate costs associated with a CD title. The unit direct materials cost for the CD is: Blank CD Case $2.00 0.70 Song lyric insert 0.70 The production process is straightforward. First, the blank CDs are brought to a production area where the digital soundtrack is copied onto the CD. The copying machine can copy 1,380 CDs per hour. After the CDs are copied, they are brought to an assembly area where an employee packs the CD with a case and song lyric insert. The direct labor cost is $0.30 per CD. The CDs are sold to record stores. Each record store is given promotional materials, such as posters and aisle displays. Promotional materials cost $45 per store. In addition, shipping costs average $0.30 per CD. Total completed production was 579,000 units during the year. Other information is as follows: Number of customers (record stores) 24,600 Number of CDs sold 492,200 Wholesale price (to record store) per CD $18 Factory overhead cost is applied to jobs at the rate of $690 per copy machine hour. There were an additional 144,750 copied CDs, packages, and inserts waiting to be assembled on December 31, 2018. Instructions: 1. Prepare an annual income statement for the Cyclone Panic CD, including supporting calculations, from the information above. Round unit costs to the nearest cent, if rounding is required. Sales Cost of goods sold R-Tunes Inc. Cyclone Panic CD Income Statement For the Year Ended December 31, 20Y8 Gross profit Selling expenses: Media campaign 2,605,500 Promotional materials 1,107,000 Shipping expenses 147,660 Total selling expenses 3,860,160 Administrative expenses: Legal expenses Total operating expenses Income from operations 782,000 4,642,160 Manufacturing cost per unit (CD): Direct materials: Blank CD Case Song lyric insert Total direct materials Direct labor Factory overhead Total manufacturing cost per CD Feedback Check My Work 1. (a) Calculate the sales amount. (b) Calculate the manufacturing cost per unit. Calculate the overhead cost per unit by dividing the rate per copy machine hour by CDs per hour. (c) Multiply the manufacturing cost per unit with the number of units sold. (d) Multiply sales with the commission rate. 2. Determine the balances in the work-in-process and finished goods inventories for the Cyclone Panic CD on December 31, 20Y8. When performing intermediate calculations, round unit costs to the nearest cent. 2. Determine the balances in the work-in-process and finished goods inventories for the Cyclone Panic CD on December 31, 2018. When performing intermediate calculations, round unit costs to the nearest cent. Finished Goods balance, December 31, 2018 $ Work in Process balance, December 31, 20Y8 $ X Feedback Check My Work Multiply the number of units in the finished goods inventory with the cost per unit. Multiply the number of units in the work-in-process inventory with the direct materials and factory overhead costs per unit. Feedback Check My Work Partially correct Flow of Costs and Income Statement R-Tunes Inc. is in the business of developing, promoting, and selling musical talent online and with compact discs (CDs). The company signed a new group, called Cyclone Panic, on January 1, 2018. For the first six months of 2018, the company spent $2,605,500 on a media campaign for Cyclone Panic and $782,000 in legal costs. The CD production began on April 1, 2018. R-Tunes uses a job order cost system to accumulate costs associated with a CD title. The unit direct materials cost for the CD is: Blank CD Case $2.00 0.70 Song lyric insert 0.70 The production process is straightforward. First, the blank CDs are brought to a production area where the digital soundtrack is copied onto the CD. The copying machine can copy 1,380 CDs per hour. After the CDs are copied, they are brought to an assembly area where an employee packs the CD with a case and song lyric insert. The direct labor cost is $0.30 per CD. The CDs are sold to record stores. Each record store is given promotional materials, such as posters and aisle displays. Promotional materials cost $45 per store. In addition, shipping costs average $0.30 per CD. Total completed production was 579,000 units during the year. Other information is as follows: Number of customers (record stores) 24,600 Number of CDs sold 492,200 Wholesale price (to record store) per CD $18 Factory overhead cost is applied to jobs at the rate of $690 per copy machine hour. There were an additional 144,750 copied CDs, packages, and inserts waiting to be assembled on December 31, 2018. Instructions: 1. Prepare an annual income statement for the Cyclone Panic CD, including supporting calculations, from the information above. Round unit costs to the nearest cent, if rounding is required. Sales Cost of goods sold R-Tunes Inc. Cyclone Panic CD Income Statement For the Year Ended December 31, 20Y8 Gross profit Selling expenses: Media campaign 2,605,500 Promotional materials 1,107,000 Shipping expenses 147,660 Total selling expenses 3,860,160 Administrative expenses: Legal expenses Total operating expenses Income from operations 782,000 4,642,160 Manufacturing cost per unit (CD): Direct materials: Blank CD Case Song lyric insert Total direct materials Direct labor Factory overhead Total manufacturing cost per CD Feedback Check My Work 1. (a) Calculate the sales amount. (b) Calculate the manufacturing cost per unit. Calculate the overhead cost per unit by dividing the rate per copy machine hour by CDs per hour. (c) Multiply the manufacturing cost per unit with the number of units sold. (d) Multiply sales with the commission rate. 2. Determine the balances in the work-in-process and finished goods inventories for the Cyclone Panic CD on December 31, 20Y8. When performing intermediate calculations, round unit costs to the nearest cent. 2. Determine the balances in the work-in-process and finished goods inventories for the Cyclone Panic CD on December 31, 2018. When performing intermediate calculations, round unit costs to the nearest cent. Finished Goods balance, December 31, 2018 $ Work in Process balance, December 31, 20Y8 $ X Feedback Check My Work Multiply the number of units in the finished goods inventory with the cost per unit. Multiply the number of units in the work-in-process inventory with the direct materials and factory overhead costs per unit. Feedback Check My Work Partially correct