Managerial Accounting: P1-5A Pedriani Company is a manufacturer of computers

Managerial Accounting 
Pedriani Company is a manufacturer of computers. Its controller resigned in October 2011. An inexperienced assistant accountant has prepared the following income statement for the month of October 2011. 
Income Statement 
For the Month Ended October 31, 2011 
Sales (net) $780,000 
Less: Operating expenses 
Raw materials purchases $264,000 
Direct labor cost 190,000 
Advertising expense 90,000 
Selling and Administrative salaries 75,000 
Rent on factory facilities 60,000 
Depreciation on sales equipment 45,000 
Depreciation on factory equipment 31,000 
Indirect labor cost 28,000 
Utilities expense 12,000 
Insurance expense 8,000 803,000 
Net loss ($23,000)

Prior to October 2011 the company had been profitable every month. The company's president is concerned about the accuracy of the income statement. As his 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 $18,000 $34,000 
Work in process 16,000 14,000 
Finished goods 30,000 48,000 

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 2011. 
(b) Prepare a correct income statement for October 2011.
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