# 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
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

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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