Swift Company was organized on March 1 of the current year. After five months of startup losses management had expected to earn a profit during August, the most recent month. Management was disappointed, however, when the income statement for August also showed a loss. August's income statement follows SWIFT COMPANY Income Statement For the Month Ended August 31 Sales Less: Operating expenses $ 490,000 Indirect labour cost Utilities Direct labour cost Depreciation, factory equipment Raw materials purchased Depreciation, sales equipment Insurance Rent on facilities Selling and administrative salaries Advertising $ 14,400 16,000 62,000 23,000 189,000 18,000 3,400 47,000 40,000 86,700499,500 Net loss S (9,500) The company's controller resigned a month ago. Sam, a new assistant in the controller's office, prepared the income statement above. Sam has had little $9,500 loss for August, Swift's president stated, "l was sure we'd be profitable within six months, but our six months are up and this loss for August is even worse than July's. I think it's time to start looking for someone to buy out the company's assets-if we don't, within a few months there won't be any assets to sell. By the way, I don't see any reason to look for a new controller. We'll just limp along with Sam for the time being." experience in manufacturing operations. After seeing the Additional information about the company follows: a. Some 70% of the utilities cost and 70% of the insurance apply to factory operations. The remaining amounts apply to selling and administrative activities. b. Inventory balances at the beginning and end of August were as follows Raw materials Work in process Finished goods August 1 $ 24,000 8,000 47,000 August 31 21,000 22,000 52,000