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 plants operation:

Beginning inventory		0
Units produced		44,000
Units sold		39,000
Selling price per unit		$85
Selling and administrative expenses:
Variable per unit		$3
Fixed per month	$	564,000
Manufacturing costs:
Direct materials cost per unit		$15
Direct labor cost per unit		$8
Variable manufacturing overhead cost per unit		$2
Fixed manufacturing overhead cost per month	$	836,000

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

Required:

1.	Assume that the company uses absorption costing.

a.

Determine the unit product cost.

Unit product cost

b. Prepare an income statement for May.

High Country, Inc.
Absorption Costing Income Statement
	0
	$0

2.	Assume that the company uses variable costing.

a.	Determine the unit product cost.

Unit product cost

b. Prepare a contribution format income statement for May.

High Country, Inc.
Variable Costing Income Statement
Variable expenses:
		0
		0
Fixed expenses:
		0
		$0