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

Production costs (10,000 units):
Direct materials	$170,000
Direct labor	360,000
Variable factory overhead	190,000
Fixed factory overhead	50,000	$770,000
Operating expenses:
Variable operating expenses	$ 60,000
Fixed operating expenses	18,000	78,000

If 500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

a.$42,800

b.$41,500

c.$36,000

d.$38,500