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 inventory 0 Units produced 45,000 Units sold 40,000 Selling price per unit $ 81 Selling and administrative expenses: Variable per unit $ 2 Fixed (per month) $ 561,000 Manufacturing costs: Direct materials cost per unit $ 15 Direct labor cost per unit $ 9 Variable manufacturing overhead cost per unit $ 2 Fixed manufacturing overhead cost (per month) $ 720,000 Management is anxious to assess the profitability of the new camp cot during the month of May. 2. Assume that the company uses variable costing. b. Prepare a contribution format income statement for May. Prepare a contribution format income statement for May. Assume that the company uses variable costing. High Country, Inc. Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold Fixed selling and administrative expenses 0 Contribution margin 0 0 $0

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...

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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 inventory		0
Units produced		45,000
Units sold		40,000
Selling price per unit	$	81
Selling and administrative expenses:
Variable per unit	$	2
Fixed (per month)	$	561,000
Manufacturing costs:
Direct materials cost per unit	$	15
Direct labor cost per unit	$	9
Variable manufacturing overhead cost per unit	$	2
Fixed manufacturing overhead cost (per month)	$	720,000

Management is anxious to assess the profitability of the new camp cot during the month of May.

2. Assume that the company uses variable costing.

b. Prepare a contribution format income statement for May.

Prepare a contribution format income statement for May. Assume that the company uses variable costing.

High Country, Inc.
Variable Costing Income Statement
Sales
Variable expenses:
Variable cost of goods sold
Fixed selling and administrative expenses

		0
Contribution margin		0




		0
		$0

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