A business operated at 100% of capacity during its first month, with the following results: Sales (112 units) $448,000 P...
A business operated at 100% of capacity during its first month, with the following results:
Sales (112 units) $448,000 Production costs (140 units): Direct materials $60,536 Direct labor 15,456 Variable factory overhead 27,048 Fixed factory overhead 25,760 128,800 Operating expenses: Variable operating expenses $6,244 Fixed operating expenses 4,263 10,507
What is the amount of the income from operations that would be reported on the absorption costing income statement?
a.$355,061 b.$359,324 c.$447,860 d.$334,453
Homework Answers
Income statement
| Sales | 448,000 | |
| Cost of goods sold : | ||
| Direct material | 60,536 | |
| Direct labor | 15,456 | |
| Variable factory overhead | 27,048 | |
| Fixed factory overhead | 25,760 | |
| 128,800 | ||
| Ending inventory (128,800 x 28/140) | -25,760 | |
| Cost of goods sold | -103,040 | |
| Gross profit | 344,960 | |
| Operating expenses : | ||
| Variable operating expenses | -6,244 | |
| Fixed operating expenses | -4,263 | |
| Net operating income | $334,453 |
Net operating income = $334,453
Correct option is (d)
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