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 operating income reported on the absorption costing income statement would be a.$68,400 b.$52,000 c.$70,000 d.$50,400
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 operating income reported on the absorption costing income statement would be a.$68,400 b.$52,000 c.$70,000 d.$50,400
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2CMA
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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 operating income reported on the absorption costing income statement would be
a.$68,400
b.$52,000
c.$70,000
d.$50,400
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