High Country, Inc., produces and sells many recreational products. The company h

Question

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 produced Units sold Selling price per unit Selling and administrative expenses: 36,000 31,000 85 Variable per unit Fixed (per month) 567,000 Manufacturing costs 17 Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (per month) 576,000 Management is anxious to assess the profitability of the new camp cot during the month of May. Requirec 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. Req 1A Req 1B Req 2A Req 2B

Explanation / Answer

1a) Unit product cost

1b) Absorption costing income statement :

2a) Unit product cost

2b) Variable costing income statement :

Direct material 17 Direct labour 7 Variable manufacturing overhead 2 Fixed manufacturing overhead (576000/36000) 16 Unit product cost 42

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