10.

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

Sales (110 units)		$539,000
Production costs (137 units):
Direct materials	$72,568
Direct labor	18,528
Variable factory overhead	32,424
Fixed factory overhead	30,879	154,399
Operating expenses:
Variable operating expenses	$5,647
Fixed operating expenses	3,746	9,393

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

a.$430,430

b.$405,638

c.$434,176

d.$538,863