High Country, Inc., produces and sells many recreational products. The company h

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 markeled throughout the Unted States. The following cost and revenue data relate to May, the first month of the plant's aperation: 2. Assume that the company uses variable costing a. Determine the unit product cost. Beginning inventory Units produced Units sold Selling price per unit Seling and administrative expenses: it product cost 0,000 8,000 $75 Variable per unit Fixed per month $6 $200,000 Manufacturing costa: Direct materials cost per unit Direct labor cost per unit Vaniable manufacturing overhead cost per unit Fixed manufacturing overhead cost per month 100,000 520 $8 $2 b. Prepare a contribution format income statement for May. High Country, Inc., Variable Costing Income Statement Management is anxious to see how profitable the new camp cot wil be and has asked that an income statement be propared for May Required: 1. Assume that the company uses absorption costing. Variable expenses: a. Determine the unit product cost product cost40 b. Prepare an income statement for May. Fixed expenses High Country, Inc., S 600,000 320,000 280,000 248,000 32,000 Cost of goods sold Gross margin Net operating income

Explanation / Answer

Construct The Absorption Costing Unit Product Cost Year 1 Direct Material 20 Direct labour 8 Variable Manufacturing overheads 2 Fixed Manufacturing overheads 10.00 (100,000 /10,000 units) Absorption costing unit prroduct cost 40.00 Construct the Absorption Costing Income Statement Year 1 Sales $600,000 Cost of Goods sold 320000 Gross Margin $280,000 Selling and distribution expense 248,000 (8000*6+ 200,000) Net operating income 32,000 Compute the Variable costing Unit Product cost Year 1 Direct Material 20 Direct labour 8 Variable Manufacturing overheads 2 Variable costing unit prroduct cost 30 Construct The Variable Costing Income Statement YEAR 1 Sales 600,000 Less: Variable cost    variable cost of goods sold 240,000    Variable selling expense 48,000 288,000 Contribution margin 312,000 Fixed expense:    Fixed Manufacturing overheads 100,000    Fixed selling expense 200,000 Net operating Income 12,000

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.