A business operated at 100% of capacity during its first month, with the following results:Sales (105 units) $556,500Production costs (131 units): Direct materials$75,054 Direct labor19,163 Variable factory overhead33,535 Fixed factory overhead31,937159,689 Operating expenses: Variable operating expenses$5,877 Fixed operating expenses3,0358,912The amount of gross profit that would be reported on the absorption costing income statement isa.$428,506b.$556,369c.$422,628d.$419,593

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Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 23E: Orinder Company provided the following information for the last calendar year: During the year,...

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100%

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

Sales (105 units)		$556,500
Production costs (131 units):
Direct materials	$75,054
Direct labor	19,163
Variable factory overhead	33,535
Fixed factory overhead	31,937	159,689

Operating expenses:
Variable operating expenses	$5,877
Fixed operating expenses	3,035	8,912

The amount of gross profit that would be reported on the absorption costing income statement is

a.$428,506

b.$556,369

c.$422,628

d.$419,593

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