Empire Company is a manufacturer of smartphones. Its controller resigned in October 2027. An inexperienced assistant accountant has prepared the following income statement.
October 2027,
Empire Company
Income Statement
For the Month Ended October 31, 2027
Sales revenue
$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
$(23,000)
Net loss
Prior to October 2027, the company had been profitable every month. The company's president is concerned about the accuracy of the income statement. As her friend, you