A business operated at 100% of capacity during its first month, with the following results:
-The amount of gross profit that would be reported on the absorption costing income statement is
A)$21,000
B)$18,900
C)$27,900
D)$18,000

Question

A business operated at 100% of capacity during its first month, with the following results:  ​
-The amount of gross profit that would be reported on the absorption costing income statement is
A)$21,000 
B)$18,900 
C)$27,900 
D)$18,000

Quizplus · Accepted Answer

Gross profit under absorption costing includes all manufacturing costs (direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead) as part of the cost of goods sold. The correct amount must account for all these costs in determining the gross profit from the sale of goods.

A Business Operated at 100% of Capacity During Its First