The following exhibit presents data pertaining to the operations of the Corerail Manufacturing Company for the year 20x5. Corerail maintains separate accounts for direct and indirect material within raw materials inventory 
Corrail Trial Balance		
Sales revenue	$1,000,000	
Direct materials inventory, 01/01/X5	20,000	
Direct labor	250,000	
Depreciation, plant	50,000	
Depreciation, factory equipment	30,000	
Cutting tools used	12,000	
Indirect labor	10,000	
Utilities, plant 	8,000	
Supervisor salaries, plant	30,000	
Indirect materials used	7,000	
Property taxes, administrative offices	5,000	
Administrative salaries	100,000	
Salesperson salaries	150,000	
Work-in-process inventory, 12/31/X5	20,000	
Finished goods inventory, 01/01 /X5	30,000	
Property taxes, plant	11,000	
Supplies, administrative offices	8,000	
Finished goods inventory, 12/31/X5	40,000	
Direct materials inventory, 12/31/X5	30,000	
Work-in-process inventory, 01/01/X5	40,000	
Direct materials purchases	120,000	
Depreciation, administrative offices	60,000	

The following schedule of cost of goods manufactured and income statement were prepared with the 2-schedule approach

Brock MANUFACTURING COMPANY
SCHEDULE OF COST OF GOODS MANUFACTURED
FOR THE YEAR ENDED DECEMBER 31, 20X5	
Direct materials:
  Direct materials inventory, 01 /01 /X5	
$ 20,000	
	
  Purchases of direct materials	120,000		
  Total direct materials available	$140,000		
  Less direct materials inventory, 12/31/X5	<30,000>	$110,000	
Direct labor			250,000	
Overhead:
  Depreciation, plant	
$ 50,000	
	
  Depreciation, factory equipment	30,000		
  Supervisor salaries, plant	30,000		
  Indirect labor	10,000		
  Utilities, plant	8,000		
  Indirect materials used	7,000		
  Cutting tools used	12,000		
  Property taxes, plant	11,000	158,000	
Total manufacturing costs		$518,000	
Work-in-process inventory, 01/01/X5		40,000	
Less work-in-process inventory, 12/31/X5		<20,000>	
Cost of goods manufactured		$538,000	

Brock Manufacturing Company
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 20X5	
Sales revenue 		$1,000,000	
Cost of goods sold:			
Finished goods inventory, 01/01/X5	30,000		
Cost of goods manufactured 	538,000		
Total goods available for sale 	$568,000 		
Less finished goods inventory, 12 / 31 /X5	<40,000>	<528,000>	
Gross profit		$ 472,000	
Selling and administrative expenses:			
Salesperson salaries	$150,000		
Administrative salaries	100,000		
Supplies, administrative offices	8,000		
Depreciation, administrative offices	60,000		
Property taxes, administrative offices 	5,000	<323,000>	
Net income before taxes 		$ 149,000