Question

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

Sales (116 units)   $649,600
Production costs (145 units):  
   Direct materials $87,777  
   Direct labor 22,411  
   Variable factory overhead 39,220  
   Fixed factory overhead 37,352 186,760
 
Operating expenses:  
   Variable operating expenses $6,117  
   Fixed operating expenses 4,952 11,069

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

a.$649,455
b.$494,075
c.$489,123
d.$500,192

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