Veekay Company was organized on November 1 of the previous year.After seven months of start-up losses, management had expected toearn a profit during June, the most recent month. Management wasdisappointed, however, when the income statement for June alsoshowed a loss. June’s income statement follows:

VEEKAY COMPANY
Income Statement
For the Month Ended June 30
Sales				$	727,500
Less operatingexpenses:
Sellingand administrative salaries	$	42,600
Rent onfacilities		49,000
Purchases of raw materials		236,000
Insurance		10,900
Depreciation, sales equipment		12,350
Utilities costs		62,200
Indirectlabour		126,200
Directlabour		105,300
Depreciation, factory equipment		14,800
Maintenance, factory		8,900
Advertising		93,400			761,650
Operating loss				$	(34,150	)
After seeing the $34,150 loss for June, Veekay’s presidentstated, “I was sure we’d be profitable within six months, but aftereight months we’re still spilling red ink. Maybe it’s time for usto throw in the towel. To make matters worse, I just heard thatDebbie won’t be back from her surgery for at least six moreweeks.”      Debbie is the company’scontroller; in her absence, the statement above was prepared by anew assistant who has had little experience in manufacturingoperations. Additional information about the company follows: Only 85% of the rent on facilities applies to factoryoperations; the remainder applies to selling and administrativeactivities. Inventory balances at the beginning and end of June were asfollows: June 1 June 30   Raw materials $19,900 $50,050   Work in process $78,350 $97,150   Finished goods $23,080 $71,130   c. Some 90% of the insurance and 80% of the utilitiescost apply to factory operations; the remaining amounts apply toselling and administrative activities.     The president has asked you to checkover the above income statement and recommend whether the companyshould continue operations. Required: 1. As one step in gathering data for arecommendation to the president, prepare a schedule of cost ofgoods manufactured for June. 2.As a second step, prepare a new income statement for themonth.