11

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

Sales (109 units)		$479,600
Production costs (136 units):
Direct materials	$64,687
Direct labor	16,516
Variable factory overhead	28,903
Fixed factory overhead	27,526	137,632
Operating expenses:
Variable operating expenses	$5,477
Fixed operating expenses	4,607	10,084

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

a.$479,464

b.$359,208

c.$381,269

d.$385,876