A business operated at 100% of capacity during its first month and incurred the

Question

A business operated at 100% of capacity during its first month and incurred the following costs:

If 1,800 units remain unsold at the end of the month and sales total $1,023,000 for the month, what would be the amount of income from operations reported on the absorption costing income statement?

a.$67,241

b.$162,393

c.$152,641

d.$76,993

Production costs (17,700 units): Direct materials $172,500 Direct labor 237,900 Variable factory overhead 250,800 Fixed factory overhead 95,900 $757,100 Operating expenses: Variable operating expenses $132,300 Fixed operating expenses 48,200 180,500

Explanation / Answer

Calculate income from operations :

so answer is b) $162,393

Sales 1023000 Cost of goods sold (757100/17700*15900) (680107) Gross profit 342893 Operating expense (180500) Income from operation 162393

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