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 42,000 Units sold 37,000 Selling price per unit $76 Selling and administrative expenses: Variable per unit $3 Fixed (per month) $ 557,000 Manufacturing costs: Direct materials cost per unit $16 Direct labor cost per unit $9 Variable manufacturing overhead cost per unit $1 Fixed manufacturing overhead cost (per month) $ 672,000 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. Unit product cost b. Prepare an income statement for May. High Country, Inc. Absorption Costing Income Statement 2. Assume that the company uses variable costing. a. Determine the unit product cost. Unit product cost b. Prepare a contribution format income statement for May. High Country, Inc. Variable Costing Income Statement Variable expenses: Fixed expenses:

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...

See similar textbooks

Related questions

Question

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		42,000
Units sold		37,000
Selling price per unit		$76
Selling and administrative expenses:
Variable per unit		$3
Fixed (per month)	$	557,000
Manufacturing costs:
Direct materials cost per unit		$16
Direct labor cost per unit		$9
Variable manufacturing overhead cost per unit		$1
Fixed manufacturing overhead cost (per month)	$	672,000

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.

Unit product cost

b. Prepare an income statement for May.

High Country, Inc.
Absorption Costing Income Statement

2. Assume that the company uses variable costing.

a. Determine the unit product cost.

Unit product cost

b. Prepare a contribution format income statement for May.

High Country, Inc.
Variable Costing Income Statement

Variable expenses:





Fixed expenses:

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions