Sales (112 units) $448,000 P…

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Question “A business operated at 100% of capacity during its first month, with the following results: Sales (112 units) $448,000 P…”

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

Sales (112 units) $448,000 Production costs (140 units):  
Direct materials $60,536       Direct labor 15,456       Variable
factory overhead 27,048       Fixed factory overhead 25,760 128,800
Operating expenses:       Variable operating expenses $6,244      
Fixed operating expenses 4,263 10,507

What is the amount of the income from operations that would be
reported on the absorption costing income statement?

a.$355,061 b.$359,324 c.$447,860 d.$334,453

Answer


Income statement

Sales 448,000
Selling price of goods:
Material directly 60,536
Direct labor 15,456
Overhead variable for factories 27,048
Fixed overhead in the factory 25,760
128,800
Ending inventory (128,800×28/140). -25,760
Selling price -103,040
Gross profit 344,960
Operating expenses
Variable operating costs -6,244
Fixed operating costs -4,263
Net operating income $334,453

Net operating income = $334,453


The correct option is (d).

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