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High Country, Incorporated, produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will
High Country, Incorporated, 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 plant's operation: Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (per month) 42,000 37,000 $78 52 $ 567,000 $16 $6 $ 2 $ 756,000 Management is anxious to assess the profitability of the new camp cot during the month of May. Required: 1. Assume that the company uses absorption costing. a. Calculate the unit product cost. b. Prepare an income statement for May. 2. Assume that the company uses variable costing. a. Calculate the unit product cost. b. Prepare a contribution format income statement for May. Complete this question by entering your answers in the Req 1A Req 1B Req 2A Req 2B Prepare an income statement for May. Assume that the com High Country, Incorporated Absorption Costing Income Statement Sales $ 2,886,000 Cost of goods sold Gross margin 2,886,000 Selling and administrative expenses Net operating income $ 2,886,000 < Req 1A Req 1A Req 1B Req 2A Req 2B Prepare a contribution format income statement for May. Assume that the cor High Country, Incorporated Variable Costing Income Statement Sales Variable expenses: Indirect materials Indirect labor Variable cost of goods sold Variable selling expense $2,886,000 $ 592,000 222,000x 74,000 74,000 962,000 1,924,000 Contribution margin Fixed expenses: Fixed manufacturing overhead 756,000 Fixed selling and administrative expense 567,000 Net operating income 1,323,000 $ 601,000
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