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High Country, Inc., produces and sells many recreational products. The company has just opened a new plant to produce a foldiReq 1A Reg 1B Reg 2A Req 2B Prepare a contribution format income statement for May. Assume that the company uses variable cos

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Answer #1
Req 1A:
Absorption costing
Direct materials per unit 15
Direct labor per unit 7
Variable manufacturing overhead per unit 1
Fixed manufacturing overhead per unit ( 836000 / 44000 ) 19
Unit product cost 42
Req 1B:
High country Inc.
Absorption costing income statement
Sales ( 39000 * 76 ) 2964000
Cost of goods sold ( 39000 * 42 ) 1638000
Gross profit 1326000
Selling and administrative expense [ ( 39000 * 3 ) + 561000 ] 678000
Operating income 648000
Req 2A:
Variable costing
Direct materials per unit 15
Direct labor per unit 7
Variable manufacturing overhead per unit 1
Unit product cost under variable costing 23
Req 2B:
High country Inc.
Variable costing income statement
Sales ( 39000 * 76 ) 2964000
Variable expenses :
    Variable Cost of goods sold ( 39000 * 23 ) 897000
    Selling and administrative expense ( 39000 * 3 ) 117000
1014000
Contribution margin 1950000
Fixed expenses :
    Fixed Manufacturing overhead 836000
   Fixed Selling and administrative expense 561000
1397000
Net Operating income 553000
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