A business operated at 100% capacity during its first month and incurred the fol

ID: 2370678 • Letter: A

Question

A business operated at 100% capacity during its first month and incurred the following costs:

production costs (10,000 units)

direct materials 80,000

direct labor 120,000

variable facctory overhead 140,000

fixed operating epxneses 40,000

380,000

operating expenses:

variable operating expenses 65,000

fixed operating expenses 25,000

90,000

If 1,000 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the absorption costing balance sheet?

a) $38,000

b $40,500

c) $34,000

d) $47,000

please show calculations

The amount of inventory that would be reported on the absorption costing balance sheet = 380000/10000*1000 = $38,000

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