A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (19,500 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead $176,500 230,500 250,600 93,200 $750,800 Operating expenses: Variable operating expenses $122,900 Fixed operating expenses 46,200 169,100 If 2,000 units remain unsold at the end of the month, the amount of inventory that would be reported on the variable costing balance sheet is Oa. $80,051 Ob. $67,440 Oc. $94,349 Od. $77,005

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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### Operational Cost Analysis for a New Business

A business operated at full capacity (100%) during its first month and incurred the following costs associated with the production of 19,500 units:

#### Production Costs:

- **Direct Materials:** $176,500
- **Direct Labor:** $230,500
- **Variable Factory Overhead:** $250,600
- **Fixed Factory Overhead:** $93,200

The total production cost amounts to **$750,800**.

#### Operating Expenses:

- **Variable Operating Expenses:** $122,900
- **Fixed Operating Expenses:** $46,200

Total operating expenses equal **$169,100**.

#### Inventory Calculation:

Given that 2,000 units remain unsold at the end of the month, the inventory value to be reported on a variable costing balance sheet is determined through the following options:

a. $80,051  
b. $67,440  
c. $94,349  
d. $77,005  

The goal is to calculate based on these options which one reflects the correct valuation of remaining inventory using variable costing methods.
Transcribed Image Text:### Operational Cost Analysis for a New Business A business operated at full capacity (100%) during its first month and incurred the following costs associated with the production of 19,500 units: #### Production Costs: - **Direct Materials:** $176,500 - **Direct Labor:** $230,500 - **Variable Factory Overhead:** $250,600 - **Fixed Factory Overhead:** $93,200 The total production cost amounts to **$750,800**. #### Operating Expenses: - **Variable Operating Expenses:** $122,900 - **Fixed Operating Expenses:** $46,200 Total operating expenses equal **$169,100**. #### Inventory Calculation: Given that 2,000 units remain unsold at the end of the month, the inventory value to be reported on a variable costing balance sheet is determined through the following options: a. $80,051 b. $67,440 c. $94,349 d. $77,005 The goal is to calculate based on these options which one reflects the correct valuation of remaining inventory using variable costing methods.
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