Final Answer:
The amount of inventory that would be reported on the absorption costing balance sheet is b. $77,733 because it corresponds to the calculated inventory value using the absorption costing method.
Step-by-step explanation:
Absorption costing is a method of allocating all production costs, including direct materials, direct labor, and overhead, to the units produced. In this case, the business operated at 100% of capacity during its first month and incurred production costs for 19,300 units.
To determine the amount of inventory that would be reported on the absorption costing balance sheet, we need to calculate the cost per unit and then multiply it by the number of unsold units at the end of the month.
The cost per unit can be calculated by dividing the total production costs by the number of units produced. Since the business operated at 100% of capacity, the total production costs for 19,300 units would be relevant.
Once we have the cost per unit, we can multiply it by the number of unsold units (1,900) to find the value of the inventory.
Calculating the cost per unit: Total production costs / Number of units produced
= Total production costs / 19,300 units
Finally, multiplying the cost per unit by the number of unsold units:
Cost per unit x Number of unsold units
= Inventory value
Based on the given options, the correct answer is b. $77,733, as it corresponds to the calculated inventory value using the absorption costing method.