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 39,000Units sold 34,000Selling price per unit$80Selling and administrative expenses: Variable per unit$3Fixed (per month)$559,000Manufacturing costs: Direct materials cost per unit$16Direct labor cost per unit$8Variable manufacturing overhead cost per unit$2Fixed manufacturing overhead cost (per month)$780,000 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.

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

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

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...

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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		39,000
Units sold		34,000
Selling price per unit	$	80
Selling and administrative expenses:
Variable per unit	$	3
Fixed (per month)	$	559,000
Manufacturing costs:
Direct materials cost per unit	$	16
Direct labor cost per unit	$	8
Variable manufacturing overhead cost per unit	$	2
Fixed manufacturing overhead cost (per month)	$	780,000

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.

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