A new business operated at 100% of capacity during its first month and incurred the following costs: Selling price is $800 per unit.

Production costs (2,000 units):

Direct materials $180,000

Direct labor 240,000

Variable factory overhead 280,000

Fixed factory overhead 100,000

Operating expenses:

Variable operating expenses $130,000

Fixed operating expenses 50,000 180,000

If 500 units are unsold during the month, what is the amount of gross profit reported under Variable Costing? a. $800,000 b. $975,000 c. $625,000 d. $575,000