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Inventory Exercise Manufacturing companies deal with three different types of inventory: Raw Material, Work-in-Process, and Finished Goods Inventory. From the following information calculate the new inventory balances as of the end of January and the total Cost of Goods Sold for the period of January. Job #1Job #2Job #3Job #4 December 31, 20xxBeginning Balance Raw Material Inventory$55,000DM Applied January Work-in-Process$30,000Made up of the 4 jobs listedDL Applied January Job #1$10,000OV Applied January Job #2$5,000Job Totals Job #3$12,000January Additions Job #4$3,000 Finished Goods Inventory$27,500Raw Material Beginning Balance Raw Material PurchasesPurchased January January$22,000Job #1 Job #2 Job #3 Direct Materials Applied to Jobs during JanuaryJob #4 Job #1$3,500Raw Material Total Job #2$6,000 Job #3$2,500WIP Job #4$8,000Beginning Balance Job #1 January Direct Labor Applied to Jobs during JanuaryJob #2 January Job #1$3,000Job #3 January Job #2$8,000Job #4 January Job #3$500Job #1 Sold Job #4$10,000Job #3 Finished Goods WIP Total Overhead through the end of December is applied. Apply overhead at 25% of the direct labor cost to each job for January Finished Goods Job #1 was sold before the end of January.Beginning Balance Job #1 Job #3 was moved into Finished Goods before the end of JanuaryJob #3 Job #1 Finished Goods Total COGS EOQ Calculate the EOQ for the following items based on the information given. Annual DemandAnnual Holding Cost (per unit) Order Cost Item #130000$0.75$25.00 Item #215000$3.15$30.00 Item #355000$2.50$20.00 Item #480000$2.00$40.00 EOQ Item #1 Item #2 Item #3 Item #4 Operating Budget Create an operating budget for the first quarter of a new business. Projected Sales are: Month #1: $65,000 Month #2: $97,500 Month #3: $130,000 Month #4: $110,500 These sales are based on selling one product with a selling price of $6.50 Create a Production Budget based on Units (not dollars). · Desired Finished Goods Ending Inventory each month is 10% of the next month’s projected sales. (Use the Finished Goods Ending Inventory amount for the previous year for the Beginning Finished Goods Inventory to start this year). Create a Direct Materials Purchase Budget · Each unit produced requires 10# of direct materials at a cost of $0.08 per pound. · Desired Ending Direct Materials Inventory is 10% of the next month’s material requirements. Create a Direct Labor Budget · Direct Labor Costs are $15/hour · Each unit requires 5 minutes of labor Create an Overhead Budget · Variable Overhead Expenses are: · Supplies ($.02 per unit) · Inspection ($.10 per unit) · Maintenance and Repair ($.03 per unit) · Utilities ($.01 per unit) · Fixed Overhead Expenses are $1100 monthly. Create a Selling and Administrative Budget · Variable Selling & Administrative Expenses are: · Sales Commissions ($.03 per unit) · Delivery ($.01 per unit) · Office Support ($.02 per unit) · Fixed Selling & Administrative Expenses are $2500 monthly. Combine all Budgets to Create a Budgeted Income Statement Complete a Budgeted Income Statement for months 1 through 3, and a Budgeted Income Statement that reflects the total first quarter. Overhead Allocation The company has two revenue centers: Retail Services and Commercial Services. There are also three service centers: Maintenance, Office Support, and Facility Support. The maintenance center supplies support to all four other centers. The Maintenance area is allocated based on maintenance work orders (Office Support: 10 work orders, Facility Support: 20 work orders, Retail Services: 25 work orders, Commercial Services: 75 work orders). The Office Support is allocated based on hours (Facility Support: 40 hours of Office Support, Retail Services: 50 hours of Office Support, Commercial Services: 200 hours of Office Support). The Facility Support is allocated based on number of customers (Retail Services: 150 customers, Commerical Services: 75 customers). Overhead rates are calculated based on the number of invoices generated (Retail Services: 40,000 invoices, Commercial Services: 10,000 invoices). Allocate overhead to the two revenue centers based on the direct method, and calculate the departmental overhead rates. MaintenanceOffice SupportFacility SupportRetail ServicesCommercial Services Center Costs$300,000$125,000$100,000$75,000$50,000 Maintenance Office Support Facility Support Total Overhead Rate Allocate overhead to the two revenue centers based on the step method, and calculate the departmental overhead rates. MaintenanceOffice SupportFacility SupportRetail ServicesCommercial Services Center Costs$300,000$125,000$100,000$75,000$50,000 Maintenance Office Support Facility Support Total Overhead Rate