dibene company is a manufacturer of computers. its controller resigned in october 2012. an inexperienced assistant accountant has prepared the following income statement for the month of october 2012.

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dibene company is a manufacturer of computers. its controller resigned in october 2012. an inexperienced assistant accountant has prepared the following income statement for the month of october 2012.

dibene company
income statement
for the month ended october 31, 2012
sales (net) $1,014,000
less: operating expenses
raw materials purchases $343,200
direct labor cost 247,000
advertising expense 117,000
selling and administrative salaries 97,500
rent on factory facilities 78,000
depreciation on sales equipment 58,500
depreciation on factory equipment 40,300
indirect labor cost 36,400
utilities expense 15,600
insurance expense 10,400 1,043,900
net loss ($29,900)

prior to october 2012, the company had been profitable every month. the company’s 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 $23,400 $44,200
work in process 20,800 18,200
finished goods 39,000 62,400

2. only 70% 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 2012.

(b) prepare a correct income statement for october 2012.
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