Empire Company is a manufacturer of smart phones. Its controller resigned in October 2017. An inexperienced assistant accountant has prepared the following income statement for the month of October 2017.

EMPIRE COMPANY Income Statement For the Month Ended October 31, 2017
Sales revenue					$ 794,900
Less:	Operating expenses
	Raw materials purchases		$ 264,100
	Direct labor cost		189,300
	Advertising expense		91,400
	Selling and administrative salaries		76,100
	Rent on factory facilities		61,600
	Depreciation on sales equipment		45,000
	Depreciation on factory equipment		32,500
	Indirect labor cost		28,500
	Utilities expense		12,500
	Insurance expense		8,500		809,500
Net loss					$( 14,600 )

Prior to October 2017, the company had been profitable every month. The companys president is concerned about the accuracy of the income statement. As her friend, you have been asked to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired additional information as follows. 1. Inventory balances at the beginning and end of October were:

		October 1		October 31
Raw materials		$ 21,000		$ 35,200
Work in process		20,400		14,200
Finished goods		29,700		53,600

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.