A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (5,000 units): Direct materials $70,000 Direct labor 20,000 Variable factory overhead 10,000 Fixed factory overhead 2,000 $102,000 Operating expenses: Variable operating expenses $17,000 Fixed operating expenses 1,000 18,000 If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of manufacturing margin that would be reported on the absorption costing income statement is a.$70,000 b.$50,000 c.$54,000 d.not reported
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (5,000 units): Direct materials $70,000 Direct labor 20,000 Variable factory overhead 10,000 Fixed factory overhead 2,000 $102,000 Operating expenses: Variable operating expenses $17,000 Fixed operating expenses 1,000 18,000 If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of manufacturing margin that would be reported on the absorption costing income statement is a.$70,000 b.$50,000 c.$54,000 d.not reported
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 and incurred the following costs:
| Production costs (5,000 units): | ||
| Direct materials | $70,000 | |
| Direct labor | 20,000 | |
| Variable factory |
10,000 | |
| Fixed factory overhead | 2,000 | $102,000 |
| Operating expenses: | ||
| Variable operating expenses | $17,000 | |
| Fixed operating expenses | 1,000 | 18,000 |
If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of manufacturing margin that would be reported on the absorption costing income statement is
a.$70,000
b.$50,000
c.$54,000
d.not reported
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