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Sheridan Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced assistant accountant has prepared the following income statement for

Sheridan Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced assistant accountant has prepared the following income statement for the month of October 2020.

SHERIDAN COMPANY Income Statement For the Month Ended October 31, 2020

Sales revenue

$793,700

Less:

Operating expenses

Raw materials purchases

$263,100

Direct labor cost

188,200

Advertising expense

92,800

Selling and administrative salaries

77,800

Rent on factory facilities

61,700

Depreciation on sales equipment

44,400

Depreciation on factory equipment

32,100

Indirect labor cost

30,000

Utilities expense

11,400

Insurance expense

8,700 810,200

Net loss

$(16,500)

Prior to October 2020, 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

$20,700 $35,800

Work in process

20,800 14,000

Finished goods

29,700 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.

(a)

Prepare a schedule of cost of goods manufactured for October 2020.

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