Annandale inc, produce and sells wireless reading devices. a competitor, Danube electronic products, sells similar wireless reading devices that it purchases at wholesale from Sonex for $75 each. Both

Annandale inc, produce and sells wireless reading devices. a competitor, Danube electronic products, sells similar wireless reading devices that it purchases at wholesale from Sonex for $75 each. Both sell the devices for $180. in 2009 Annandale produced devices at the following cost:

Direct materials purchase $530,000; Direct materials used $490,000; Direct labor $200,000; Indirect production include: depreciation $35,000; indirect labor $20,000; other $155,000. Total cost of production $900,000.

Assume that Annandale had no beginning inventory of direct materials. Neither company had any beginning inventory of finished devices, but both had ending inventory of 2,500 finished devices. Ending working process inventory for Annandale was negligible. Each company sold 9,500 devices for $1,710,000 in 2009 and incurred the following selling and administrative costs:

Sales salaries and commissions $110,000; depreciation on retail store $ 45,000; Advertising $ 10,000; other $5,000; total selling and administrative cost $170,000.

Question:

1. Prepare the inventories section of the balance sheet for December 31, 2009 for Danube.

2. Prepare the inventories section of the balance sheet for December 31, 2009 for Annandale.

3. Using the cost of goods sold format as a model prepare an income statement for the year 2009 for Danube.

4. Using the cost of goods sold format as a model prepare an income statement for the year 2009 for Annandale.

5. Summarize the differences between the financial statements for danube, a merchandiser, and Annandale, a manufacturer.

6. What purpose of cost management system is being served by reporting the items in 1- 4.

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