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Coverall Inc. produces and sells a unique type of case for astandard-size tablet computer that is guaranteed waterproof butstill allows for regular functionality of the tablet. The companyhas just opened a new plant to manufacture these cases, and thefollowing cost and revenue data have been provided for the firstmonth of the plant’s operation in the form of a worksheet:

Beginning inventory 0

Units produced 20,000

Units sold 15,000

Selling price per unit $ 80

Selling and administrative expenses:

Variable per unit $ 6

Fixed (total) $ 475,000

Manufacturing costs:

Direct materials cost per unit $ 12

Direct labour cost per unit $ 9

Variable manufacturing overhead cost per unit $ 5

Fixed manufacturing overhead cost (total) $ 600,000

Since the new case is unique in design, management is anxiousto see how profitable it will be and has asked that an incomestatement be prepared for the month.

Required:

1. Assume that the company uses absorption costing.

a. Determine the unit product cost.

b. Prepare an income statement for the month. (Do not leaveany empty spaces; input a 0 wherever it is required.)

2. Assume that the company uses variable costing.

a. Determine the unit product cost.

b. Prepare a contribution format income statement for themonth. (Do not leave any empty spaces; input a 0 wherever it isrequired.)