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 45,000 Units sold 40,000 Selling price per unit $78 Selling and administrative expenses: Variable per unit $2 Fixed (per month) $ 558,000 Manufacturing costs: Direct materials cost per unit $15 Direct labor cost per unit $6 Variable manufacturing overhead cost per unit $3 Fixed manufacturing overhead cost (per month) $ 720,000 Management is anxious to see how profitable the new camp cot will be and has asked that an income statement be prepared for May.

b. Prepare a contribution format income statement for May. High Country, Inc. Variable Costing Income Statement Sales 3,120,000 Variable expenses: Indirect materials Indirect labor Variable cost of goods sold Variable selling and administrative expense 0 3,120,000 Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expense 0 Net operating income $ 3,120,000