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: VEEKAY COMPANY Income Statement For the Month Ended June 30 Sales $ 795,000 Less operating expenses Selling and administrative salaries $ 46,200 Rent on facilities 58,000 Purchases of raw materials 263,000 Insurance 12,800 Depreciation, sales equipment 13,700 Utilities cont 69,400 Indirect labour 133,400 Direct labour 111,600 Depreciation, factory equipment 16,600 Maintenance, factory 9,800 Advertising 98,800 832,300 Operating loss $(37,300) After seeing the $37,300 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. Debble 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 $20,000 $79,700 $24,160 June 30 $54,100 $100,300 $ 76,260 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 contin operations. Required: 1. As one step in gathering data for a recommendation to the president, prepare a schedule of cost of goods manufactured for June. VEEKAY COMPANY Schedule of Cost of Goods Manufactured 1. As one step in gathering data for a recommendation to the president, prepare a schedule of cost of goods manufactured for June. VEEKAY COMPANY Schedule of Cost of Goods Manufactured For the Month Ended June 30 Direct materials 0 $ 0 Manufacturing overhead: Total overhead costs Direct materials: 0 $ 0 Manufacturing overhead: Total overhead costs Total manufacturing costs 0 0 0 Cost of goods manufactured 0 Direct materials: 0 Administrative expenses Depreciation, factory equipment $ 0 Direct labour Indirect labour Total overhead costs Total manufacturing costs 0 2. As a second step, prepare a new income statement for the montn. VEEKAY COMPANY Income Statement For the Month Ended June 30 Cost of goods sold: 0 Q Selling and administrative expenses: Oo $ $