Summer Fun Inc., produces and sells many recreational products. The company has just opened a new plant to produce Kerosene Lanterns that will be marketed throughout the United States. Thfollowing cost and revenue data relate to February, the first month of the plant's operation:Direct MaterialDirect LaborVariable MOHVariable Selling & AdminFixed MOHFixed Selling & Admin$8 Units Produced$5 Units Sold$2$3$60,000$80,00012,00010,000Determine the per unit cost under both variable costing and absorption costing and prepare the income statement for each costing methodPrice per unit is $33

ABSORPTION COSTINGAbsorption Costing is a Cost Management Accounting method in which all costs…

Answered: Summer Fun 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, Incorporated, 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 49,000 Units sold 44,000 Selling price per unit $ 84 Selling and administrative expenses: Variable per unit $ 4 Fixed (per month) $ 561,000 Manufacturing costs: Direct materials cost per unit $ 15 Direct labor cost per unit $ 6 Variable manufacturing overhead cost per unit $ 3 Fixed manufacturing overhead cost (per month) $ 735,000 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…
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