Im getting wrong numbers but im not sure what im doing wrong.
VEEKAY COMPANY Schedule of Cost of Goods Manufactured For the Month Ended June 30 Direct materials: $ 20,100 242,000 Raw materials inventory, June 1 Add: Purchases of raw materials Raw materials available for use Deduct: Raw materials inventory, June 30 Raw materials used in production 262,100 50,950 $ 211,150 Direct labour 106,700 Manufacturing overhead: Indirect labour Depreciation, factory equipment Insurance 127,800 15,200 11,100 Rent on facilities 43,450 Maintenance, factory 9,100 Utilities 63,800 Total overhead costs 270,450 Total manufacturing costs Add: Work in process inventory, June 1 588,300 78,650 666,950 97,850 Deduct: Work in process inventory, June 30 Cost of goods manufactured $ 569,100 Veekay Company was organized on November 1 of the previous year. After seven months of start-up losses, management had expected to earn a profit during June, the most recent month. Management was disappointed, however, when the income statement for June also showed a loss. June's income statement follows: $ 742,500 VEEKAY COMPANY Income Statement For the Month Ended June 30 Sales Less operating expenses: Selling and administrative salaries Rent on facilities Purchases of raw materials Insurance Depreciation, sales equipment Utilities costs Indirect labour Direct labour Depreciation, factory equipment Maintenance, factory Advertising Operating loss $ 43,400 51,000 242,000 11,100 12,650 63,800 127,800 106,700 15, 200 9,100 94,600 777,350 $ (34,850) After seeing the $34,850 loss for June, Veekay's president stated, I was sure we'd be profitable within six months, but after eight months we're still spilling red ink. Maybe it's time for us to throw in the towel. To make matters worse, I just heard that Debbie won't be back from her surgery for at least six more weeks." Debbie is the company's controller; in her absence, the statement above was prepared by a new assistant who has had little experience in manufacturing operations. Additional information about the company follows: a. Only 85% of the rent on facilities applies to factory operations; the remainder applies to selling and administrative activities. b. Inventory balances at the beginning and end of June were as follows: Raw materials Work in process Finished goods June 1 $20, 100 $78,650 $23,320 June 30 $50,950 $97,850 $72, 270 c. Some 90% of the insurance and 80% of the utilities cost apply to factory operations; the remaining amounts apply to selling and administrative activities. The president has asked you to check over the above income statement and recommend whether the company should continue operations. Pequired 2. As a second step, prepare a new income statement for the month. VEEKAY COMPANY Income Statement For the Month Ended June 30 Sales $ 742,500 $ Cost of goods sold: Finished goods inventory, June 1 Add: Cost of goods manufactured Goods available for sale Deduct: Finished goods inventory, June 30 Gross margin Selling and administrative expenses: 23,320 569,100 592,420 742,500 0 $ 742,500
