Deta Mountain Supplies has been in business for three months. The company was formed by two outdoor enthusiasts to produce high quality sleeping bags, which can used in all kinds of weather conditians. The ow ners of the company were well skilled in production and had developed an excellent relationship with a boutique store that specializes in selling outdoor equipment. The administration work and the accounting have been managed by the brother of one of the owner's The brother had a business degree but no special training in accounting. The ow ners had just received the income statement for the latest quarter and were somewhat dsmayed by the results. The company had almost reached its productive capadty for producing sleeping bags and most of them had been sold Still, he income statement, presented in exhibit ane, showed an operating loss for the quarter. Beleving something was not carrect, the owners have hired you to review the accounting information and to report back to them. Exhibit One Delta Mountain Supplies Income Statement For the Quarter ended, September 30 Sales (5,000 sleeping bags) $72,000 Operating expenses Selling and administrative salaries Travel for sales purposes Advertising Indirect labour costs $63,000 45,000 98,000 100,000 Raw materials purchased Plart supplies Direct labour cost 220,000 5,000 75,p00 38,000 13,000 50,000 6,000 Plart maintenance Depreciation, office equipment Rent (90% for the plant, 10% for sales space) Insurance (Plant only) Deprediation, Plant equipment Utilities (80% plant, 20% for sales operations) Total operating expenses Operating loss 65,000 32.000 810000 SL90.000)