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Empire Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced assistant accountant has prepared the following income statement for the month of October 2020. $795,000 EMPIRE COMPANY Income Statement For the Month Ended October 31, 2020 Sales revenue Less: Operating expenses Raw materials purchases $264,600 Direct labor cost 190,200 Advertising expense 91,000 Selling and administrative salaries 77,800 Rent on factory facilities 61,000 Depreciation on sales equipment 45,800 Depreciation on factory equipment 32,500 Indirect labor cost 28,200 Utilities expense 11,600 Insurance expense 8,300 Net loss 811,000 $(16,000) Prior to October 2020, the company had been profitable every month. The company's president is concerned about the accuracy of the income statement. As her friend, you have been asked to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired additional information as follows. 1. Inventory balances at the beginning and end of October were: Raw materials Work in process Finished goods October 1 $19,700 19,400 29,900 October 31 $36,000 14,700 53,500 2. Only 75% of the utilities expense and 60% of the insurance expense apply to factory operations. The remaining amounts should be charged to selling and administrative activities. EMPIRE COMPANY Cost of Goods Manufactured Schedule $

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