High Country, Inc., produces and sells many recreational products. The company has just opened a new...

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Accounting

High Country, Inc., produces and sells many recreationalproducts. The company has just opened a new plant to produce afolding camp cot that will be marketed throughout the UnitedStates. The following cost and revenue data relate to May, thefirst month of the plant’s operation:
Beginning inventory 0
Units produced 43,000
Units sold 38,000
Selling price per unit $ 79
Selling and administrative expenses:
Variable per unit $ 4
Fixed (per month) $ 556,000
Manufacturing costs:
Direct materials cost per unit $ 15
Direct labor cost per unit $ 7
Variable manufacturing overhead cost per unit $ 3
Fixed manufacturing overhead cost (per month) $ 774,000
Management is anxious to assess the profitability of the newcamp 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.

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Answer1aUnit product cost under Absorption costingDirect materials Direct Labor Variable manufacturing overhead fixed manufacturing overhead 15 7318 43 per unit Explanation Unit fixed manufacturing overhead fixed manufacturing overheadNo of units produced 77400043000 units 18 per unit b HIGH COUNTRY INC Income statement Using absorption costing approach Particulars See Answer

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Beginning inventory		0
Units produced		43,000
Units sold		38,000
Selling price per unit	$	79
Selling and administrative expenses:
Variable per unit	$	4
Fixed (per month)	$	556,000
Manufacturing costs:
Direct materials cost per unit	$	15
Direct labor cost per unit	$	7
Variable manufacturing overhead cost per unit	$	3
Fixed manufacturing overhead cost (per month)	$	774,000