2. A new business operated at 100% of capacity during its first month and incurred the following costs: Production costs (2,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead $180,000 240,000 280,000 100.000 $800,000 Operating expenses: Variable operating expenses $130,000 Fixed operating expenses 50,000 180,000 If 400 units are sold during the month, what is total cost of production reported under Absorption Costing? a. $160,000 b. S640,000 c. $140,000 d. $800,000 e. $700,000