P1-5A Prepare a cost of goods manufactured schedule and a correct income statement
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						$780,000
	Less: Operating Expenses
	Raw materials purchases				$264,000
	Direct labor costs				190,000
	Advertising expense				90,000
	Selling and administrative salaries				75,000
	Rent on factory facilities				60,000
	Depreciation on sales equipment				45,000
	Depreciation on factory equipment				31,000
	Indirect labor cost				28,000
	Utilities expense				12,000
	Insurance expense				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 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		$18,000	$29,000
	Work in process		20,000	14,000
	Finished goods		30,000	50,000
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.
Instructions
(a)	Prepare a schedule of cost of goods manufactured for October 2017.
(b)	Prepare a correct income statement for October 2017.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

After you have completed P1-5A, consider the additional question.
1.	Assume that utilities expense and insurance expense changed to $15,000 and $9,000 respectively. Also assume
	that 80% of utilities expense and 65% of insurance expense apply to factory operations. Show the impact of these
	changes on the cost of goods manufactured schedule and the income statement.