The Swift Company has just completed its operations for September 2005. The company's accountant resigned two weeks ago, subsequently a very inexperienced clerk has prepared the following income statement of the month's activities:

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The Swift Company has just completed its operations for September 2005. The company's accountant resigned two weeks ago, subsequently a very inexperienced clerk has prepared the following income statement of the month's activities:

INCOME STATEMENT FOR THE MONTH ENDED 30 SEPTEMBER 2005

Sales

R

450 000

less: Operating expenses:

476 000

Indirect labour cost

12 000

Electricity and water

15 000

Direct labour cost

90 000

Depreciation: factory equipment

21 000

Raw materials purchased

159 000

Depreciation: sales equipment

18 000

Insurance

4 000

Rent

50 000

Selling and administrative salaries

32 000

Advertising

75 000

Net loss

R26 000

You have been asked to check the statement and make corrections as needed. You have discovered the following additional information.

i. The Swift Company is a manufacturing firm.

ii. Some 60% of the electricity and water and 75% of the insurance apply to factory operations, the remaining amounts apply to selling and administrative activities.

iii. Balances in the stock accounts at the beginning and end of the month were:

1/9/2005

R

30/9/2005

R

Raw materials

8 000

27 000

Work in progress

16 000

21 000

Finished goods

40 000

60 000

iv. Only 80% of the rent applies to factory operations

Required

(a) Prepare a schedule for cost of goods manufactured, in good form, for September 2005.

(b) Prepare a corrected income statement for the month.

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The Swift Company has just completed its operations for September 2005. The company's accountant resigned two weeks ago, subsequently a very inexperienced clerk has prepared the following income statement of the month's activities:

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