A business operated at 100% of capacity during its first month, with the following results:Sales (107 units) $577,800Production costs (134 units): Direct materials$78,221 Direct labor19,971 Variable factory overhead34,950 Fixed factory overhead33,286166,428 Operating expenses: Variable operating expenses$5,953 Fixed operating expenses4,85210,805The amount of gross profit that would be reported on the absorption costing income statement isa.$577,666b.$434,101c.$444,906d.$438,953

Ending Inventory (in units) = 27 units Cost per unit = Total Production CostNumber of units…

Answered: A business operated at 100% of capacity…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A business operated at 100% of capacity during its first month, with the following results:

Sales (107 units)		$577,800
Production costs (134 units):
Direct materials	$78,221
Direct labor	19,971
Variable factory overhead	34,950
Fixed factory overhead	33,286	166,428

Operating expenses:
Variable operating expenses	$5,953
Fixed operating expenses	4,852	10,805

The amount of gross profit that would be reported on the absorption costing income statement is

a.$577,666

b.$434,101

c.$444,906

d.$438,953

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