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Managerial Accounting Problem 2-16

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Do problem 2-16 on physical textbook page 66. Put your work in an Excel spreadsheet with worksheet tabs for Schedule, COGS, and Answers to Questions. Submit your work to the drop box
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:
Sales: $450,000
Less Operating expenses: Direct labor cost $70,000 Raw materials purchases $165,000 Manufacturing overhead $85,000 Selling and administrative expenses $142,000 $462,000
Net operating loss $(12,000)

After seeing the $12,000 loss for August, Swift’s president stated, “I was sure we’d be profitable within six months, but our six months are up and this loss for August is even worse than July’s. I think it’s time to start looking for someone to buy out the company’s assets – if we don’t, within a few months there won’t be any assets to sell. By the way, I don’t see any reason to look for a new controller. We’ll just limp along with Sam for the time being.”

The company’s controller’s resigned a month ago. Sam, a new assistant in the controller’s office prepared the income statement above. Sam has had little experience in manufacturing operations.

Inventory balances at the beginning and end of August were:…...

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