A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units): Direct materials $80,000 Direct labor 120,000 Variable factory overhead 140,000 Fixed factory overhead 40,000 $380,000 Operating expenses: Variable operating expenses $65,000 Fixed operating expenses 25,000 90,000 If 1,000 units remain unsold at the end of the month, the amount of inventory that would be reported on the absorption costing balance sheet is a.$47,000 b.$38,000 c.$40,500 d.$34,000
A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (10,000 units): Direct materials $80,000 Direct labor 120,000 Variable factory overhead 140,000 Fixed factory overhead 40,000 $380,000 Operating expenses: Variable operating expenses $65,000 Fixed operating expenses 25,000 90,000 If 1,000 units remain unsold at the end of the month, the amount of inventory that would be reported on the absorption costing balance sheet is a.$47,000 b.$38,000 c.$40,500 d.$34,000
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 (10,000 units): | ||
| Direct materials | $80,000 | |
| Direct labor | 120,000 | |
| Variable factory |
140,000 | |
| Fixed factory overhead | 40,000 | $380,000 |
| Operating expenses: | ||
| Variable operating expenses | $65,000 | |
| Fixed operating expenses | 25,000 | 90,000 |
If 1,000 units remain unsold at the end of the month, the amount of inventory that would be reported on the absorption costing
a.$47,000
b.$38,000
c.$40,500
d.$34,000
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