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:

  Beginninginventory 0
  Units produced 48,000
  Units sold 43,000
  Selling price perunit $84
  Selling andadministrative expenses:
    Variableper unit $2
    Fixedper month $ 566,000
  Manufacturingcosts:
    Directmaterials cost per unit $16
    Directlabor cost per unit $10
    Variablemanufacturing overhead cost per unit $3
    Fixedmanufacturing overhead cost per month $ 864,000

    Management is anxious to see howprofitable the new camp cot will be and has asked that an incomestatement be prepared for May.

Required:
1. Assume that the company usesabsorption costing.

a. Determine the unit productcost.

b.
Prepare an income statement for May.

2. Assume that the company usesvariable costing.

a. Determine the unit productcost.

b.
Prepare a contribution format income statement for May.

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3.9 Ratings (495 Votes)

Answer 1Unit Product Cost Direct Materials Cost per unit DirectLabor Cost per unit Variable Manufacturing Overhead Cost per unit Fixed Manufacturing Overhead Cost per unitUnit Product Cost 16 10 3 86400048000Unit Product See Answer

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Transcribed Image Text

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: Beginninginventory0 Units produced48,000 Units sold43,000 Selling price perunit$84 Selling andadministrative expenses: Variableper unit$2 Fixedper month$566,000 Manufacturingcosts: Directmaterials cost per unit$16 Directlabor cost per unit$10 Variablemanufacturing overhead cost per unit$3 Fixedmanufacturing overhead cost per month$864,000 Management is anxious to see howprofitable the new camp cot will be and has asked that an incomestatement be prepared for May. Required:1.Assume that the company usesabsorption costing. a.Determine the unit productcost. b.Prepare an income statement for May. 2.Assume that the company usesvariable costing. a.Determine the unit productcost. b.Prepare a contribution format income statement for May.


Beginninginventory		0
Units produced		48,000
Units sold		43,000
Selling price perunit		$84
Selling andadministrative expenses:
Variableper unit		$2
Fixedper month	$	566,000
Manufacturingcosts:
Directmaterials cost per unit		$16
Directlabor cost per unit		$10
Variablemanufacturing overhead cost per unit		$3
Fixedmanufacturing overhead cost per month	$	864,000