A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (5,000 units):       Direct materials $70,000     Direct labor 20,000     Variable factory overhead 10,000     Fixed factory overhead 2,000 $102,000 Operating expenses:       Variable operating expenses $17,000     Fixed operating expenses 1,000 18,000 If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of manufacturing margin that would be reported on the absorption costing income statement is a.$70,000 b.$50,000 c.$54,000 d.not reported

Question

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

Production costs (5,000 units):    
  Direct materials $70,000  
  Direct labor 20,000  
  Variable factory overhead 10,000  
  Fixed factory overhead 2,000 $102,000
Operating expenses:    
  Variable operating expenses $17,000  
  Fixed operating expenses 1,000 18,000

If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of manufacturing margin that would be reported on the absorption costing income statement is

a.$70,000
b.$50,000
c.$54,000
d.not reported

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