A business operated at 100% of capacity during its first month, with the following results:Line Item DescriptionAmountAmountSales (104 units) $520,000Production costs (130 units): Direct materials$65,000 Direct labor16,250 Variable factory overhead29,250 Fixed factory overhead26,000 Total production costs $136,500Operating expenses: Variable operating expenses$5,590 Fixed operating expenses4,080 Total operating expenses 9,670The amount of operating income that would be reported on the variable costing income statement isa. $395,930b. $510,330c. $426,010d. $519,870

a. $395,930Explanation:In preparing the variable costing income statement, we need to note that all…

Answered: A business operated at 100% of capacity…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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

Line Item Description	Amount	Amount
Sales (104 units)		$520,000
Production costs (130 units):
Direct materials	$65,000
Direct labor	16,250
Variable factory overhead	29,250
Fixed factory overhead	26,000
Total production costs		$136,500
Operating expenses:
Variable operating expenses	$5,590
Fixed operating expenses	4,080
Total operating expenses		9,670