Veekay Company was organized on 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 November 1 of the previous year After seven months of start-up VEEKAY COMPANY Income Statement For the Month Ended June 30 $ 675,000 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 39,800 42,000 215,000 10,200 11,300 56,600 120,600 100,400 13,400 8,200 89,200706,700 Operating loss S (31,700) After seeing the $31,700 loss for June, Veekay's president stated, "l 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 Additional informationabout the assistant who has had little company follows experience in manufacturing operations 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 June 30 $19,200 $46,900 $77,300 $94,700 $22,240 $67,140 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 cont tinue operations