cach year. PROBLEM 4-20 Variable and Absorption Conting Unit Product Costs and Income Statements: Explanation of Difference in Net Operating Income L04-1. 06-2, L04-3 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 folkwing cost and revenue data relate to May, the first month of the plant's operation: Beginning inventory 0 Units produced TO,000 Units sold 8.000 Selling price per unit $75 Selling and administrative expenses Variable per unit $6 Fixed (per month $200,000 Manufacturing costs Direct materials cost per unit $20 Direct labor cost per unit $8 Variable manufacturing overhead cost per unit. $2 Fixed manufacturing overhead cost (per month) $100,000 Management is anxious to assess the profitability of the new camp cot during the month of May. Required: Assume that the company uses absorption costing. a. Determine the unit product cost. b. Prepare an income statement for May. 1. Variable Costing and Segment Reporting: Tools for Management 2. Assume that the company uses variable costing. a. Determine the unit product cost. b. Prepare a contribution format income statement for May. 3. Explain the reason for any difference in the ending inventory balances under the two costing methods and the impact of this difference on reported net operating income. PROBLEM 4-21 Segment Reporting and Decision Making L04-4 Vulcan Company's contribution format income statement for June is as follows