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 foldingg 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 uni Selling and administrative expenses: 46,000 41,000 76 Variable per unit Fixed (per month) 564,000 Manufacturing costs: 15 Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (per month) $ $ 736, 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 Mav.

Explanation / Answer

Income Statement

Particular

Calculation  

Amount

Sales

41000*76

3116000

(Less)Variable Cost

Cost of Goods Sold

46000*27

1242000

Selling & Adminstrative

46000*3

138000

Contribution

1736000

(Less) Fixed Cost

Selling & Adminstrative

564000

Fixed manufacturing Overhead

736000

Net Operating Income

$436000

Income Statement

Particular

Calculation  

Amount

Sales

41000*76

3116000

(Less)Variable Cost

Cost of Goods Sold

46000*27

1242000

Selling & Adminstrative

46000*3

138000

Contribution

1736000

(Less) Fixed Cost

Selling & Adminstrative

564000

Fixed manufacturing Overhead

736000

Net Operating Income

$436000

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