Blue Mountain Products manufactures and sells a variety of camping goods. Recently, the company opened a new plant to manufacture a lightweight, self-standing tent. Cost and sales data for the first month of operations (June 2020) are as follows:
| Manufacturing costs | | | |
| | Fixed overhead | | $219,440 | |
| | Variable overhead | | $3.80 | per tent |
| | Direct labour | | $15.00 | per tent |
| | Direct material | | $40.90 | per tent |
| Beginning inventory | | 0 | tents |
| Tents produced | | 10,400 | |
| Tents sold | | 9,100 | |
| Selling and administrative costs | | | |
| | Fixed | | $381,300 | |
| | Variable | | $5.90 | per tent sold |
The tent sells for $151. Management is interested in the opening months results and has asked for an income statement.
Blue Mountain Products manufactures and sells a variety of camping goods. Recently, the company opened a new plant to manufacture a lightweight, self-standing tent. Cost and sales data for the first month of operations (June 2020) are as follows: Manufacturing costs Fixed overhead Variable overhead Direct labour Direct material Beginning inventory Tents produced Tents sold Selling and administrative costs Fixed Variable $219,440 $3.80 per tent $15.00 per tent $40.90 per tent O tents 10,400 9,100 $381,300 $5.90 per tent sold The tent sells for $151. Management is interested in the opening month's results and has asked for an income statement. Assuming the company uses absorption costing: 1. Calculate the manufacturing cost per unit. (Round answer to 2 decimal places, e.g. 25.75.) Manufacturing cost 80.8 per unit 2. Prepare an absorption-costing income statement for the month of June 2020. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 125.) BLUE MOUNTAIN PRODUCTS Income Statement-Absorption Costing For the Month Ended June 30, 2020 Sales 1374100 Less Cost of goods sold 735280 1 Gross profit 638820 Less Selling and administrative expenses Variable 536901 HO Fixed 381300 Assuming the company uses variable costing: 1. Calculate the manufacturing cost per unit. (Round answer to 2 decimal places, e.g. 25.75.) Manufacturing cost 59.7 per unit 2. Prepare a variable-costing income statement for the month of June 2020. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to o decimal places, e.g. 125.) BLUE MOUNTAIN PRODUCTS Income Statement-Variable Costing For the Month Ended June 30, 2020 Sales 1374100 Less Variable costs Variable cost of goods sold 543270 Variable selling and administrative expenses 53690 | Total variable costs 596960 Contribution margin 777140 Your answer is correct. Reconcile the difference in net income between the absorption-costing and variable-costing methods. Reconciliation Statement Net income as per absorption costing 203830 Fixed overhead cost of ending inventory of tents 27430 Net income as per variable costing 176400 (d) Assuming the company uses throughput costing: 1. Calculate the manufacturing cost per unit. (Round answer to 2 decimal places, e.g. 25.75.) Manufacturing cost 40.9 per unit 2. Prepare a throughput-costing income statement for the month of June 2020. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to o decimal places, e.g. 125.) BLUE MOUNTAIN PRODUCTS Income Statement-Throughput Costing For the Month Ended June 30, 2020 Sales 1374100 Less Cost of goods sold 372190 Throughput contribution margin 1001910 Less Operating expenses Variable selling and administrative expenses 224770 Manufacturing cost 40.9 per unit 2. Prepare a throughput-costing income statement for the month of June 2020. (Round per unit calculations to 2 decimal places, e.g. 15.25 and final answers to o decimal places, e.g. 125.) BLUE MOUNTAIN PRODUCTS Income Statement-Throughput Costing For the Month Ended June 30, 2020 Sales 1374100 Less Cost of goods sold 372190 Throughput contribution margin 1001910 Less Operating expenses Variable selling and administrative expenses 224770 Fixed manufacturing overhead Fixed selling and administrative expenses Total operating expenses Net income before tax
