Need help with this please. Problem 6-20A Variable and Absorption Costing Unit Product...
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Problem 6-20A Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in Net Operating Income [LO6-1, LO6-2, LO6-3]
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 inventory0Units produced46,000Units sold41,000Selling price per unit$82Selling and administrative expenses:Variable per unit$4Fixed per month$567,000Manufacturing costs:Direct materials cost per unit$16Direct labor cost per unit$8Variable manufacturing overhead cost per unit$3Fixed manufacturing overhead cost per month$690,000
Management is anxious to see how profitable the new camp cot will be and has asked that an income statement be prepared for 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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