A business operated at 100% of capacity during its first month, with the following results:Sales (104 units) $436,800Production costs (130 units): Direct materials$59,023 Direct labor15,070 Variable factory overhead26,372 Fixed factory overhead25,115125,580 Operating expenses: Variable operating expenses$5,199 Fixed operating expenses4,4139,612The amount of operating income that would be reported on the absorption costing income statement isa.$346,816b.$351,229c.$436,670d.$326,725

Sales revenue: It is the revenue earned by a business on selling the goods or providing services to…

Answered: A business operated at 100% of capacity…

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 (104 units)		$436,800
Production costs (130 units):
Direct materials	$59,023
Direct labor	15,070
Variable factory overhead	26,372
Fixed factory overhead	25,115	125,580

Operating expenses:
Variable operating expenses	$5,199
Fixed operating expenses	4,413	9,612

The amount of operating income that would be reported on the absorption costing income statement is

a.$346,816

b.$351,229

c.$436,670

d.$326,725

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