A Business Operated at 100% of Capacity During Its First

question 10

Multiple Choice

A business operated at 100% of capacity during its first month and incurred the following costs:
If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what would be the amount of income from operations reported on the variable costing income statement?

• A) $100,800
• B) $100,000
• C) $114,800
• D) $140,000

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Definitions:

Actual Output

Actual output is the factual quantity of goods or services produced within a specified time frame, representing productivity.

Standard Price

The predetermined cost assigned to materials, labor, or overhead for the purposes of budgeting and variance analysis.

Material Price Variance

The difference between the actual cost of direct materials and the expected (standard) cost, indicating budgetary performance.

Direct Materials

Raw materials that can be directly attributed to the production of goods.