Question
A business operated at 100% of capacity during its first month, with the following results: Sales (118 units) $531,000 Production costs (148 units): Direct materials
A business operated at 100% of capacity during its first month, with the following results:
| Sales (118 units) | $531,000 | |
| Production costs (148 units): | ||
| Direct materials | $71,995 | |
| Direct labor | 18,382 | |
| Variable factory overhead | 32,168 | |
| Fixed factory overhead | 30,635 | 153,180 |
| Operating expenses: | ||
| Variable operating expenses | $5,975 | |
| Fixed operating expenses | 4,971 | 10,946 |
The amount of operating income that would be reported on the absorption costing income statement is
a.$530,852
b.$397,925
c.$422,349
d.$427,320
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
