Asher, Inc. manufactures desk lamps. Last year 800,000 lamps were made and sold for $32 each. The actual unit cost for a desk lamp follows:

Direct materials                           $15.00 Direct labor                                   4.00

Overhead                                   8.00

Total unit cost                          $27.00

The only selling expenses were a commission of $1.60 per unit sold and advertising totaling $90,000. Administrative expenses, all fixed, equaled $500,000. There were no beginning or ending finished goods inventories. There were no beginning or end- ing work-in-process inventories.

Required

1. Prepare an income statement for external users. Do you need to prepare a sup- porting statement of cost of goods manufactured? Explain.

2. Suppose that there were 800,000 desk lamps produced (and 800,000 sold) but that the company had a beginning finished goods inventory of 50,000 lamps produced in the prior year at $25 per unit. The company follows a first-in, first- out policy for its inventory (meaning that the units produced first are sold first for purposes of cost flow). What effect does this have on the income statement? Show the new statement.