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: Beginning inventory 0Units produced 46,000Units sold 41,000Selling price per unit$79Selling and administrative expenses: Variable per unit$3Fixed (per month)$562,000Manufacturing costs: Direct materials cost per unit$15Direct labor cost per unit$8Variable manufacturing overhead cost per unit$3Fixed manufacturing overhead cost (per month)$828,000 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. Prepare a contribution format income statement for May. Assume that the company uses variable costing. High Country, Inc.Variable Costing Income StatementSales $3,239,000Variable expenses: Variable cost of goods sold Variable selling expenses 0 3,239,000 0 $3,239,000

Name: High Country, Inc., produces and sells many recreational products. The
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Description: 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

Solution-1 A Absorption Unit…

Answered: High Country, Inc., produces and sells…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 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		0
Units produced		46,000
Units sold		41,000
Selling price per unit	$	79
Selling and administrative expenses:
Variable per unit	$	3
Fixed (per month)	$	562,000
Manufacturing costs:
Direct materials cost per unit	$	15
Direct labor cost per unit	$	8
Variable manufacturing overhead cost per unit	$	3
Fixed manufacturing overhead cost (per month)	$	828,000

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.

Prepare a contribution format income statement for May. Assume that the company uses variable costing.

High Country, Inc.
Variable Costing Income Statement
Sales		$3,239,000
Variable expenses:
Variable cost of goods sold
Variable selling expenses

		0
		3,239,000




		0
		$3,239,000

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