Question - A manufacturing business operates at 100% of its capacity during its first month of operations and incurs the following costs:
Production costs (10,000) units:
Direct Materials: $140,000
Direct Labor: 40,000
Variable factory overhead: 20,000
Fixed factory overhead: 4,000 $204,000
Operating expenses:
Variable operating expenses: $ 34,000
Fixed operating expenses 2,000
At the end of the month the company has 2,000 units unsold. Unit selling prices are $30.
Prepare income statement using the contribution approach.
Determine operating income using traditional costing.