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:

   

  

    Management is anxious to see how profitable the new camp cot will be and has asked that an income statement be prepared for May.

  

  

         

Prepare an income statement for May.

         

  

         

Prepare a contribution format income statement for May.

         

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:

Explanation / Answer

Absorption cost per unit = ( 16 + 7 + 3 + 731000 / 43000) = $ 43 per unit

Under variable costing method company assumes only variable expenses as per unit costs

Variable cost per unit = ( Direct material + Direct labor + Variable manufacturing overhead + Variable selling overhead) = 16 + 7+ 3 + 2 = $ 28

Income Statement - Absorption costing Units Value Direct Materials    43,000.00        688,000.00 Direct labor    43,000.00        301,000.00 Variable Manufacturing Overhead    43,000.00        129,000.00 Fixed Manufacturing Overhead        731,000.00 Cost of Production    1,849,000.00 Less: Closing stock      5,000.00        215,000.00 Cost of Goods Sold    1,634,000.00 Variable selling expense    38,000.00          76,000.00 Fixed selling expense        566,000.00 Cost Of Sales    38,000.00    2,276,000.00 Sales    38,000.00    3,040,000.00 Profit        764,000.00

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.