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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
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 | 36,000 | |
Units sold | 31,000 | |
Selling price per unit | $85 | |
Selling and administrative expenses: | ||
Variable per unit | $2 | |
Fixed per month | $ | 559,000 |
Manufacturing costs: | ||
Direct materials cost per unit | $16 | |
Direct labor cost per unit | $8 | |
Variable manufacturing overhead cost per unit | $4 | |
Fixed manufacturing overhead cost per month | $ | 684,000 |
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. |
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 May. |
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