Jasper Company provided the following information for last year:

Costs Amount

Sales in units 290,000

Selling price $13

Direct materials $150,000

Direct labor $504,000

Manufacturing overhead $110,000

Selling expense $437,000

Administrative expense $860,0

Last year, beginning and ending inventories of work in process and finished goods equaled zero.

Required: 1. Prepare an income statement for Jasper for last year.

The preparation of the income statement is presented below:

Jasper Company

Income Statement

Sales $3,770,000 (290,000 * $13)

Less: Cost of goods sold - $764,000 ($150,000 + $504,000 + $110,000)

Gross margin $3,006,000

Less: Operating expenses

Selling expenses - $437,000

Administrative expenses - $860,000

Total operating expenses - $1,297,000

Net income $1,709,000

We assume that the administrative expenses is $860,000