A business operated at 100% of capacity during its first month, with the following results: Sales (90 units) Production costs (100 units): Direct materials $40,000 Direct labor 20,000 $90,000 Variable factory overhead 2,000 69,000 Fixed factory overhead 7,000 Operating expenses: Variable operating expenses $8,000 Fixed operating expenses 1,000 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 Jack Company sells its product for $11,000 per unit. Variable costs per unit are: manufacturing, $6,000, and selling and administrative, $125. Fixed costs are: $30,000 manufacturing overhead, and $40,000 selling and administrative. There was no beginning inventory at 1/1/09. Production was 20 units per year in 2009-2011. Sales were 20 units in 2009, 16 units in 2010, and 24 units in 2011. Income under absorption costing for 2010 is: A) $8,000. B) $14,000. C) $16,000. D) $22,000.
A business operated at 100% of capacity during its first month, with the following results: Sales (90 units) Production costs (100 units): Direct materials $40,000 Direct labor 20,000 $90,000 Variable factory overhead 2,000 69,000 Fixed factory overhead 7,000 Operating expenses: Variable operating expenses $8,000 Fixed operating expenses 1,000 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 Jack Company sells its product for $11,000 per unit. Variable costs per unit are: manufacturing, $6,000, and selling and administrative, $125. Fixed costs are: $30,000 manufacturing overhead, and $40,000 selling and administrative. There was no beginning inventory at 1/1/09. Production was 20 units per year in 2009-2011. Sales were 20 units in 2009, 16 units in 2010, and 24 units in 2011. Income under absorption costing for 2010 is: A) $8,000. B) $14,000. C) $16,000. D) $22,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $40,000
Direct labor 20,000
$90,000
Variable factory overhead 2,000
69,000
Fixed factory overhead 7,000
Operating expenses:
Variable operating expenses $8,000
Fixed operating expenses 1,000
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
Jack Company sells its product for $11,000 per unit. Variable costs per unit are: manufacturing,
$6,000, and selling and administrative, $125. Fixed costs are: $30,000 manufacturing
overhead, and $40,000 selling and administrative. There was no beginning inventory at 1/1/09.
Production was 20 units per year in 2009-2011. Sales were 20 units in 2009, 16 units in 2010,
and 24 units in 2011. Income under absorption costing for 2010 is:
A) $8,000.
B) $14,000.
C) $16,000.
D) $22,000.
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