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 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 $793,700 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 $263,100 188,200 92,800 77,800 61,700 44,400 32,100 30,000 11,400 8,700 810,200 $(16,500) Net loss 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 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 Work in process Finished goods $20,700 20,800 29,700 $35,800 14,000 53,800 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