1. A business operated at 100% of capacity during its first month and incurred the
following costs:
Production costs (10,000 units):
Direct materials
Direct labor
Variable factory overhead
Fixed factory overhead
Operating expenses:
Variable operating expenses
Fixed operating expenses
$140,000
40,000
20,000
4,000
$204,000
$ 34,000
2,000
36,000
If 2,000 units remain unsold at the end of the month and sales total $300,000 for the
month, a. the amount of inventory on hand at the end of the month is a. under
absorption costing b. the amount of inventory on hand under variable costing c. will
operating income reported under variable costing be more or less than under
absorption costing? d. the amount of operating income under absorption costing
would be?
a.
b.
c.
d.
