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Ginocera Inc. is a designer, manufacturer, and distributor oflow-cost, high-quality stainless steel kitchen knives. A newkitchen knife series called the Kitchen Ninja was released forproduction in early 2016. In January, the company spent $605,000 todevelop a late-night advertising infomercial for the new product.During 2016, the company spent $1,412,000 promoting the productthrough these infomercials, and $816,000 in legal costs. The kniveswere ready for manufacture on January 1, 2016.

Ginocera uses a joborder cost system to accumulate costs associated withthe kitchen knife. The unit direct materials cost for the knifeis:

Hardened steel blanks
(used for knife shaft andblade)	$4.00
Wood (for handle)	1.55
Packaging	0.45

The production process is straightforward. First, the hardenedsteel blanks, which are purchased directly from a raw materialsupplier, are stamped into a single piece of metal that includesboth the blade and the shaft. The stamping machine requires onehour per 250 knives.

After the knife shafts are stamped, they are brought to an assemblyarea where an employee attaches the handle to the shaft and packsthe knife into a decorative box. The direct labor cost is $0.55 perunit.

The knives are sold to stores. Each store is given promotionalmaterials, such as posters and aisle displays. Promotionalmaterials cost $60 per store. In addition, shipping costs average$0.15 per knife.

Total completed production was 1,210,000 units during the year.Other information is as follows:

Number of customers(stores)	58,500
Number of knives sold	1,135,000
Wholesale price (to store)per knife	$16

Factory overhead cost is applied to jobs at the rate of $675 perstamping machine hour after the knife blanks are stamped. Therewere an additional 21,000 stamped knives, handles, and caseswaiting to be assembled on December 31, 2016.

	Required:
A.	Prepare an annual income statement for theKitchen Ninja knife series, including supporting calculations, fromthe information provided. Refer to the list of Amount Descriptionsfor exact wording of the answer choices for textentries.*
B.	Determine the balances in the work in processand finished goods inventories for the Kitchen Ninja knife serieson December 31, 2016.* *Inyour computations, if required, round interim per-unit costs to twodecimal places.