ggested Ste\" Web Slice Gallery High Country, Inc, produces and sels many recrea
ID: 2394113 • Letter: G
Question
ggested Ste" Web Slice Gallery High Country, Inc, produces and sels many recreationial products. The company has jst opened a new plant to produce a folding camp cot that will be markoted throughout the Unated Stales The follawing cost and revenue data relate to May, the frst month of the plant's operation Unts produced 46,000 1,000 S75 Units sold Seling price per unit Seling and administrative expenses: Variable per unt Fixed per month Manufacturing costs Direct matonials cost per unt Direct labor cost per unit Variable manufacturing overhead cost per unt Fosd manufacturing overhead cost per month782.000 $ 557 000 $17 S7 $1 Management s andous to see how proftable the new camp cot well be and has asked that an income statemant be prepared for May Required: 1. Assume that the company uses absorption costing uses a Determine the unit product cost product cost b. Praparo an income statement for May Costing Income S 2 Assume that the company uses variable costing L?FE SAFE CAExplanation / Answer
1a Direct materials 17 Direct labor 7 Variable manufacturing overhead 1 Fixed manufacturing overhead 17 =782000/46000 Unit product cost 42 b Sales 3075000 =41000*75 Cost of goods sold 1722000 =41000*42 Gross Margin 1353000 Selling and administrative expenses 680000 =557000+(41000*3) Net operating income 673000 2a Direct materials 17 Direct labor 7 Variable manufacturing overhead 1 Unit product cost 25 b Sales 3075000 Variable expenses: Variable cost of goods sold 1025000 Variable selling and administrative expenses 123000 Total Variable expenses 1148000 Contribution margin 1927000 Fixed expenses: Fixed manufacturing overhead 782000 Fixed selling and administrative expenses 557000 Total Fixed expenses 1339000 Net operating income(loss) 588000
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