Topic 1 - practice exam style question Ash & John is a Brisbane-based company that manufactures tennis racquets. The company produced and sold 1,000 racquets in December 2019. Each racquet was sold at $180. Ash & John had the following accounting record for the period: Raw materials inventory, 1 December $ 42,500 Raw materials inventory, 31 December $ 28,000 Work-in-process (WIP), 1 December $ 33,500 Work-in-process (WIP), 31 December $ 65,000 Finished goods, 1 December $ 20,500 Finished goods, 31 December $ 9,500 Raw materials purchased $ 65,500 Indirect materials used $ 23,000 Direct manufacturing labour (820 hours) $ 24,600 Indirect manufacturing labour (620 hours) $ 18,600 Depreciation - production equipment $ 7.000 Rent - production plant $ 9,000 Rent - administration office $ 1.200 Salary - production manager $ 6,000 Salary - administration manager $ 4,500 Other sales, general and admin costs $ 8,000 Required: A. Calculate the following amounts for the month December 2019: I. Direct materials used. II. Manufacturing costs incurred. III. Cost of goods manufactured. IV. Cost of goods sold. V. Operating profit/ loss. B. In this period, if you misclassify an inventoriable cost as period cost, i.e. understating manufacturing costs incurred, what would be the effect on the operating profit or loss you calculated in Part A - overstate, understate or no effect? Why