A business operated at 100% of capacity during its first month, with the following results: Sales (108 units) Production costs (135 units): $626,400 Direct materials $84,642 Direct labor 21,611 Variable factory overhead 37,819 Fixed factory overhead 36,018 180,090 Operating expenses: Variable operating expenses $5,253 Fixed operating expenses 4,584 9,837 The amount of gross profit that would be reported on the absorption costing income statement is: a. $472,491. b. $482,328. c. $477,075. d. $626,265.

A business operated at 100% of capacity during its first month, with the following results: Sales (108 units) Production costs (135 units): $626,400 Direct materials $84,642 Direct labor 21,611 Variable factory overhead 37,819 Fixed factory overhead 36,018 180,090 Operating expenses: Variable operating expenses $5,253 Fixed operating expenses 4,584 9,837 The amount of gross profit that would be reported on the absorption costing income statement is: a. $472,491. b. $482,328. c. $477,075. d. $626,265.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 24E: Last year, Orsen Company produced 25,000 juicers and sold 26,500 juicers for 60 each. The actual...

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Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month with the following unit costs: Fixed overhead per unit = 280,000/40,000 units produced = 7. Total fixed factory overhead is 280,000 per month. During October, 38,400 units were sold at a price of 24, and fixed marketing and administrative expenses were 130,500. Required: 1. Calculate the cost of each unit using absorption costing. 2. How many units remain in ending inventory? What is the cost of ending inventory using absorption costing? 3. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October. 4. What if November production was 40,000 units, costs were stable, and sales were 41,000 units? What is the cost of ending inventory? What is operating income for November?
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