2 Sed Swift Company was organized on March 1 of the current year. After five months of startup losses, management had expected to earn a profit during August, the most recent month Management was disappointed, however, when the income statement for August also showed a loss. August's income statement follows: WIFT CORDANY The tatament For the Month Endid Aurut 31 ates SSCO,000 Las operating expenses Indirect labour cost STELE 12.400 utilities 16,500 Direct laboutcoot 00.000 Depreciation factory wont 21.000 materiale purchased 219.000 Depreciation, les wat 10,000 Trance 5.400 ont on acilities 1.000 to and active salaries 50,000 Artising 13.700 569.000 toe 1.000) The company's controller resigned a month ago Sam, a new assistant in the controller's office, prepared the income statement above Sam has had little experience in manufacturing operations. Alter seeing the $9,000 loss for August, Swift's president stated. "I was sure we'd be profitable within six months, but our six months are up and this loss for August is even worse than July's. I think it's time to start looking for someone to buy out the company's assets if we don't within a few months there won't be any assets to sell By the way, I don't see any reason to look for a new controller. We'll just limp along with Sam for the time being Additional information about the company follows: a. Approximately 80% of the utilities cost and 75% of the insurance apply to factory operations. The remaining amounts apply to selling and administrative activities b. Inventory balances at the beginning and end of August were as follows: Chapter 1&2 - Problems 2 Materials W in proces Finished gode Aqual $24.900 0.000 53.000 520,000 15.000 62.000 c. Only 75% of the rent on facilities apples to factory operations: the temainder applies to selling and administrative activities. The president has asked you to check over the income statement and make a recommendation about whether the company should look for a buyet for its assets Required: 1. As one step in gathering data for a recommendation to the president, prepare a schedule of cost of goods manutactured for August Served 2 SWIFT COMPANY Schedule of Cost of Goods Manufactured For the Month Ended August 31 Direct materials Skipped Raw materials available for use 0 Raw materials used in production $ 0 Manufacturing overhead Total overhead costs Total manutacturing costs 0 Total work in process inventory 0 Cost of goods manufactured 5 2. As a second step, prepare a new income statement for August. 2 SWIFT COMPANY Income Statement For the Month Ended August 31 Skipped Less cost of goods sold Goods available for sale 0 Less operating expenses