A4 A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,500 units): Line Item Description Amount Amount Direct materials $176,800Direct labor 230, 900 Variable factory overhead 253, 300 Fixed factory overhead 103, 300 Total production costs $764, 300 Operating expenses: Variable operating expenses $134, 100 Fixedoperating expenses 41,300 175, 400 Total operating expenses 175,400 If 2,000 units remain unsold at the end of the month and sales total $1, 113,000 for the month, the amount of operatingincome reported on the absorption costing income statement would be a. $247,920 b. $237, 788 c. $74,566 d. $64, 488

The absorption cost is used to calculate the cost of goods sold and the ending inventory balance in…

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Business

Accounting

income reported on the absorption costing income statement

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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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,500 units): Line Item Description Amount Amount Direct materials $176,800
Direct labor 230, 900 Variable factory overhead 253, 300 Fixed factory overhead 103, 300 Total production costs $764, 300 Operating expenses: Variable operating expenses $134, 100 Fixed
operating expenses 41,300 175, 400 Total operating expenses 175,400 If 2,000 units remain unsold at the end of the month and sales total $1, 113,000 for the month, the amount of operating
income reported on the absorption costing income statement would be a. $247,920 b. $237, 788 c. $74,566 d. $64, 488

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