Swift Company was organized on March 1 of the current year. After five months of start-up losses, management had expected to earn a profit during August. Management was disappointed, however, when the income statement for August also showed a loss. Augusts income statement follows.:

After seeing the $12,000 loss for August, Swifts president stated, I was sure wed be profitable within six months, but our six months are up and this loss for August is even worse than July's. I think its time to start looking for someone to but out the company's assets-f we don't within a few moths there wont be any assets to sell. By the way, I don't see any reason to look for a new controller. Well just limp along with Sam for the time being.The company's controller resigned a month ago. Sam, a new assistant in the controllers office, prepared the income statement above. Sam has had little experience in manufacturing operations. Additional information about the company follows:a. Some 60% of the utilities cost and 75% 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:

c. Only 80% of the rent on facilities applies to factory operations the remainder applies to selling and administrative activities. The president has asked you to check over the income statement and make a recommendation as to whether the company should look for a buyer for its assets.Required:1. As one step in gathering data for a recommendation to the president, prepare a schedule of cot of goods manufactured for August.2. As a second step, prepare a new income statement for August.3. Based on your statements prepared in (1) and (2) above, would you recommend that the company look for a buyer?

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Swift Company Income Statement For the Month Ended August 31 Sales.. S450,000 Less operating expenses Indirect labor cost. $12,000 Utilities.. 15,000 Direct labor cost.. 70,000 Depreciation, factory equipment.. 21,000 S165,000 Raw materials purchased. Depreciation, sales equipment. 18,000 Insurance... 4,000 Rent on facilities.. 50,000 Selling and administrative salaries. 32,000 Advertising.. 75,000 462,000 No operating loss. S(12,000)