Question

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: 47.000 42,000 84 $ Beginning inventory Units produced Units sold Selling price per wit Selling and adinistrative expenses Variable per unit Fixed (per month) Mamut acturing costs: Direct materials cost per unit Direct labor cost per mit Variable facturing overhead cost per unit Fixed namfacturing overhead cost (per month) $ 3 $ 567.000 $ 17 $ $ $799.000 Management is anxious to assess the profitability of the new camp cat 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. Reg 1A Reg 1B Reg 2A Reg 28 Determine the unit product cost. Assume that the company uses absorption costing. Unit product cost C Reg 1 Req 18 >

Answer 1

B Amount $ 17 A 1 1) 2 Particulars 3 Direct materials 4. Direct labor 5 Variable manufacturing overhead 6 Fixed manufacturing overhead 7 Unit product cost 7 2 $ $ $ $ 17 43 8 9 High Country, Inc. 10 Absorption Costing Income Statement 11 Sales $ 3,528,000 12 Cost of goods sold $ 1,806,000 13 Gross profit $1,722,000 14 Selling and administrative expense $ 693,000 15 Net operating income $ 1,029,000

B 2 Amount 17 A 1 1) Particulars 3 Direct materials 4 Direct labor 5 Variable manufacturing overhead 6 Fixed manufacturing overhead 7 Unit product cost 17 2 =799000/47000 =+B3+B4+B5+B6 8 9 High Country, Inc. 10 Absorption Costing Income Statement 11 Sales -42000*84 12 Cost of goods sold |=42000*B7 13 Gross profit =+B11-B12 14 Selling and administrative expense =+(42000*3)+567000 15 Net operating income =+B13-B14

A B С $ 3,528,000 17 2) 18 Particulars Amount 19 Direct materials $ 17 20 Direct labor $ 7 21 Variable manufacturing overhead $ 2 22 Unit product cost $ 26 23 24 High Country, Inc. 25 Variable Costing Income Statement 26 Sales 27 Variable expenses 28 Variable cost of goods sold $ 1,092,000 29 Variable selling and administrative expense $ 126,000 30 Total variable expenses 31 Contribution margin 32 Fixed expenses: 33 Fixed manufacturing overhead $ 799,000 34 Fixed selling and administrative expense $ 567,000 35 Total fixed costs 36 Net operating income $ 1,218,000 $ 2,310,000 $ 1,366,000 $ 944,000

B с 7 А 17 2) 18 Particulars Amount 19 Direct materials 17 20 Direct labor 21 Variable manufacturing overhead 2 22 Unit product cost =+B19+B20+B21 23 24 High Country, Inc. 25 Variable Costing Income Statement 26 Sales 27 Variable expenses 28 Variable cost of goods sold -42000*B22 29 Variable selling and administrative expense =42000*3 30 Total variable expenses 31 Contribution margin 32 Fixed expenses: 33 Fixed manufacturing overhead 799000 34 Fixed selling and administrative expense 567000 35 Total fixed costs 36 Net operating income -42000*84 =+B28+B29 =+C26-C30 =+B33+B34 =+C31-C35