7. A business operated at 100% of capacity during its first month, with the following results:Sales (116 units) $649,600Production costs (145 units): Direct materials$87,777 Direct labor22,411 Variable factory overhead39,220 Fixed factory overhead37,352186,760 Operating expenses: Variable operating expenses$6,117 Fixed operating expenses4,95211,069The amount of gross profit that would be reported on the absorption costing income statement isa.$649,455b.$494,075c.$489,123d.$500,192

Answered: The amount of gross profit that would…

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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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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