A business operated at 100% of capacity during its first month, with the following results:Sales (112 units) $560,000Production costs (140 units): Direct materials$70,000 Direct labor17,500 Variable factory overhead31,500 Fixed factory overhead28,000147,000Operating expenses: Variable operating expenses$5,450 Fixed operating expenses3,6909,140The amount of operating income that would be reported on the variable costing income statement isa. $559,860b. $459,350c. $427,660d. $550,860

Variable costing approach means where goods are valued at variable manufacturing cost only and fixed…

Answered: A business operated at 100% of capacity…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 9E: The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the...

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A business operated at 100% of capacity during its first month, with the following results:

Sales (112 units)		$560,000
Production costs (140 units):
Direct materials	$70,000
Direct labor	17,500
Variable factory overhead	31,500
Fixed factory overhead	28,000	147,000
Operating expenses:
Variable operating expenses	$5,450
Fixed operating expenses	3,690	9,140

The amount of operating income that would be reported on the variable costing income statement is

a. $559,860

b. $459,350

c. $427,660

d. $550,860

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