Please show all work! Thank you! High Country, Inc., produces and sells many rec
ID: 2334322 • Letter: P
Question
Please show all work! Thank you!
High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation Beginning inventory Units producedd Units sold Selling price per unit Selling and administrative expenses: 0 44,000 39,000 83 Variable per unit Fixed (per month) 563,000 Manufacturing costs: Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (per month) 16 $ 748,000 Management is anxious to assess the profitability of the new camp cot during the month of May. Required: 1. Assume that the company uses absorption costing a. Determine the unit product cost. b. Prepare an income statement for May. 2. Assume that the company uses variable costing a. Determine the unit product cost. b. Prepare a contribution format income statement for May Complete this question by entering your answers in the table below.Explanation / Answer
1a Direct materials cost per unit 16 Direct labor cost per unit 8 Variable manufacturing overhead cost per unit 3 Fixed manufacturing overhead cost per unit 17 =748000/44000 Unit product cost 44 b Sales 3237000 =39000*83 Cost of goods sold 1716000 =39000*44 Gross profit 1521000 Selling and administrative expenses 680000 =563000+(39000*3) Net operating income 841000 2a Direct materials cost per unit 16 Direct labor cost per unit 8 Variable manufacturing overhead cost per unit 3 Unit product cost 27 b Sales 3237000 Variable expenses: Variable cost of goods sold 1053000 =39000*27 Variable selling andadministrative expenses 117000 =39000*3 Contribution margin 1170000 Fixed expenses: 2067000 Fixed manufacturing overhead 748000 Fixed selling and administrative expenses 563000 1311000 Net operating income 756000
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