Question

A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (18,200 units): Direct materials $179,000 Direct labor 233,300 Variable factory overhead 261,200 Fixed factory overhead 98,300 $771,800 Operating expenses: Variable operating expenses $124,700 Fixed operating expenses 46,700 171,400 If 1,800 units remain unsold at the end of the month and sales total $1,193,000 for the month, what would be the amount of income from operations reported on the variable costing income statement

Answer 1

Answer: $66600

Step-by-step explanation:

First, we calculate the total production cost which will be:

Direct materials = $179,000

Direct labor = $233,300

Variable factory overhead = $261,200

Total production cost = $673500

Production cost per unit = $673500 / 18200 = $37 per unit

The amount for 1800 units unsold will then be:

= 1800 × $37

= $66600

Therefore, the amount of income from operations reported on the variable costing income statement is $66600.