For 10 Pts: A business produced 20,000 units in its first month of operation and

Question

For 10 Pts: A business produced 20,000 units in its first month of operation and sold 18,000 units for $50 each. Assuming the following costs, what would be the gross profit using the absorption costing system? Production Costs: Direct Materials Direct Labor Variable Factory Overhead Fixed Factory Overhead $180,000 240,000 280,000 100,000 Operating Expenses Variable Operating Expenses Fixed Operating Expenses $130,000 50,000 A. $80,000 B. $100,000 C. $270,000 D. $180,000 For 10 Pts: A business produced 20,000 units in its first

Explanation / Answer

Unit product cost under absorption costing :

Calculate gross profit :

so answer is d) $180,000

Direct material 180000 Direct labour 240000 Variable factory overhead 280000 Fixed factory overhead 100000 Tota production cost 800000 Units 20000 Unit product cost 40

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