EMPIRE COMPANY Income Statement For the Month Ended October 31, 2017 Sales revenue $780,000 Less: Operating expenses Raw materials purchases Direct labor cost Advertising expense Selling and administrative salaries Rent on factory facilities Depreciation on sales equipment Depreciation on factory equipment Indirect labor cost Utilities expense Insurance expense $264,000 190,000 90,000 75,000 60,000 45,000 31,000 28,000 12,000 8,000 803,000 Net loss $23,000 ) Prior to October 2017, 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 you have acquired additional information as follows 1. Inventory balances at the beginning and end of October were: October 1 October 31 Raw materials Work in process Finished goods 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. $ 18,000 20,000 30,000 29,000 14,000 50,000 EMPIRE COMPANY Income statement ctober 31, 2017 ales Revenue $78000 Cost of Goods Available fo Raw Materials Purchases Cost of Goods Available fo Raw Materials Inventory, Q Factory Family Rent Depreciation on Factory E ndirect Labor Gross Profit dvertising Expense elling and Administrative Salaries epreciation Expense-Sales Equipmen tilities Expens Insurance Expense et Income (Loss)