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A business operated at 100% of capacity during its first month, with the following results: Sales (90 units) Production costs (100 units): Direct materials $90,000 $40,000 Direct labor 20,000 Variable factory overhead 2,000 Fixed factory overhead 7,000 Operating expenses: Variable operating expenses $8,000 Fixed operating expenses 1,000 69,000 9,000 What is the amount of the gross profit that would be reported on the absorption costing income statement? a. $21,000 b. $27,900 c. $18,000 d. $18,900

A business operated at 100% of capacity during its first month, with the following results: Sales (90 units) Production costs (100 units): Direct materials $90,000 $40,000 Direct labor 20,000 Variable factory overhead 2,000 Fixed factory overhead 7,000 Operating expenses: Variable operating expenses $8,000 Fixed operating expenses 1,000 69,000 9,000 What is the amount of the gross profit that would be reported on the absorption costing income statement? a. $21,000 b. $27,900 c. $18,000 d. $18,900

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
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, with the following results: Sales (90 units) Production costs (100 units): Direct materials $90,000 $40,000 Direct labor 20,000 Variable factory overhead 2,000 Fixed factory overhead 7,000 Operating expenses: Variable operating expenses $8,000 Fixed operating expenses 1,000 69,000 9,000 What is the amount of the gross profit that would be reported on the absorption costing income statement? a. $21,000 b. $27,900 c. $18,000 d. $18,900
Transcribed Image Text:A business operated at 100% of capacity during its first month, with the following results: Sales (90 units) Production costs (100 units): Direct materials $90,000 $40,000 Direct labor 20,000 Variable factory overhead 2,000 Fixed factory overhead 7,000 Operating expenses: Variable operating expenses $8,000 Fixed operating expenses 1,000 69,000 9,000 What is the amount of the gross profit that would be reported on the absorption costing income statement? a. $21,000 b. $27,900 c. $18,000 d. $18,900
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