The following are the text options for the income sheet: Variable expenses: Fixe

Question

The following are the text options for the income sheet:

Variable expenses:

Fixed expenses:

Advertising

Beginning merchandise inventory

Commissions

Depreciation

Ending merchandise inventory

Fixed manufacturing overhead

Fixed selling and administrative expense

Indirect labor

Indirect materials

Purchases

Sales

Variable cost of goods sold

Variable selling expense

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: 47,000 42,000 85 e Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (per month) $ 566,000 e 15 $ 8 $ 1 $ 799,000 Management is anxious to assess the profitability of the new camp cot during the month of May. Prepare a contribution format income statement for May. Assume that the company uses variable costing. High Country, Inc. Variable Costing Income Statement AT

Explanation / Answer

Contribution format income statement :

Sales (42000*85) 3570000 Variable cost of goods sold Direct material (42000*15) 630000 Direct labour (42000*8) 336000 Variable manufacturing overhead 42000 1008000 Manufacturing margin 2562000 Variable selling and administrative expense 126000 Contribution margin 2436000 Fixed cost Fixed manufacturing cost 799000 Fixed selling and administrative expense 566000 1365000 Net income 1071000

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