A business operated at 100% of capacity during its first month, with the followi

Question

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

What is the amount of the income from operations that would be reported on the absorption costing income statement?

a.$578,078

b.$436,063

c.$465,920

d.$462,662

Sales (98 units) $578,200 Production costs (122 units): Direct materials $77,810 Direct labor 19,866 Variable factory overhead 34,766 Fixed factory overhead 33,112 165,554 Operating expenses: Variable operating expenses $5,892 Fixed operating expenses 3,258 9,150

Explanation / Answer

Calculate income from operations :

so answer is b) $436063

Sales 578200 Cost of goods sold (165554/122*98) (132986) Gross profit 445214 Operating expense (9150) Income from operation 436064

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