Problem 2-44A

Tombert Company is a manufacturer of computers. Its controller resigned in October 2016. An inexperienced assistant accountant has prepared the following income statement for the month of October 2016.

TOMBERT COMPANY Income Statement For the Month Ended October 31, 2016
Sales (net)				$ 784,600
Less: Operating expenses
Raw materials purchases		$264,450
Direct labour cost		190,900
Advertising expense		89,300
Selling and administrative salaries		74,450
Rent on factory facilities		60,750
Depreciation on sales equipment		44,700
Depreciation on factory equipment		31,800
Indirect labour cost		28,300
Utilities expense		12,800
Insurance expense		8,300		805,750
Net Loss				$(21,150)

Prior to October 2016, the company had been profitable every month. The companys president is concerned about the accuracy of the income statement. As his friend, he has asked you to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired the following additional information. 1. Inventory balances at the beginning and end of October were as follows:

		October 1		October 31
Raw materials		$17,500		$29,600
Work in process		16,500		14,500
Finished goods		30,900		45,700

2. Only 80% of the utilities expense and 51% of the insurance expense apply to factory operations. The remaining amounts should be charged to selling and administrative activities. Calculate the following:

1. Prepare a schedule of the cost of goods manufactured for October 2016. (Round answers to 0 decimal places, e.g. 125.)

TOMBERT COMPANY Cost of Goods Manufactured Schedule For the Month Ended October 31, 2016

2.

Prepare a correct income statement for October 2016. (Round answers to 0 decimal places, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

TOMBERT COMPANY Income Statement For the Month Ended October 31, 2016