Question

NOTE all are part of #4

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 plant's operation: 25 points 8 04:39:05 48,000 43,000 77 eBook 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) 3 564,000 Print 17 References $ 768,000 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. 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. Complete this question by entering your answers in the table below.

Answer 1

1-A Assume Company Using Absorption Costing Calculation of Unit cost Under Absorption Costing Direct Material Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Over head(768000/48000) Unit Product Cost 43 Absorption Costing Unit Product Cost 1-B Income Statement Under Absorption Costing Sales (43000*77) Cost of Goods Sold (43000*43) Gross Margin Total Selling and Administrative Overheads (Fixed +Variable ), 564000+(43000*3) Net Operating Income 3311000 1849000 1462000 693000 769000

2-A Assuming the Firm Using the Variable Cositng Variable Costing Calculation of Unit cost Under Variable Costing Direct Material Direct Labour Variable Manufacturing Overhead Unit Product Cost Variable Costing Unit Product Cost Va 3311000 1161000 129000 2-B Variable Costing income Statement Sales (43000*77) LESS: Variable Expense Variable Cost of Goods Sold (43000*77) Variable Selling and Administrative Expense(43000*3) Total Varible Expenses Total Contribution Margin Less:Fixed Expenses Fixed manufacturing Overheads Fixed Selling and Administrative Expenses Total fixed Expenses Net operating income (loss) 1290000 2021000 768000 564000 1332000 689000