A business operated at 100% of capacity during its first month and incurred the
ID: 2370676 • Letter: A
Question
A business operated at 100% of capacity during its first month and incurred the following costs:
Production (10,000 units)
Direct materials 140,000
Direct labor 40,000
variable factory overhead 20,000
fixed factory overhead 4,000
204,000
Operating expences:
variable operating expences 34,000
Fixed operating ex[ences 2,000
36,000
if 2,000 units remain unsold at the the end of the month and sales total $300,000 for the month, what is the amount of the income from operations reported the variable costing income statement?
Explanation / Answer
Production costs (10,000 units): Direct Materials $140,000 Direct Labor 40,000 Variable Factory Overhead 20,000 Total production cost $200,000 Less: closing Stock $40,000 Cost of good Sold $160,000 Add: variable operating expenses $34,000 Variable Cost $194000 Add:Fixed Fixed factory overhead 4,000 fixed operating expenses 2,000 Total cost $200,000 Sale $300,000 Income $100,000
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