3 High Country, Inc., produces and sells many recreational products. The company
ID: 2398537 • Letter: 3
Question
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: points Beginning inventory unit.? Units sold Selling price per unit Selling and administrative expenses 40,000 35,000 79 Variable per unst Fixed (per month) eBook 568,000 Manufacturing contss 15 Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead coat per unit Pixed manufacturing overhead cost (per nonth) 680,000 Print Rarkeroncens Management is ansious to assess the proftablity of the new cemp cot during the month of 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. Complete this question by entering your answers in the table below. Req 1A Req 18 Req 2A Req 2B Determine the unit product cost. Assume that the company uses absorption costing.Explanation / Answer
1(a) Absorption costing unit product cost 41 1(b) High Country Inc Absorption costing Income Statement Sales 2765000 Cost of goods sold 1435000 Gross Margin 1330000 Selling and administrative expenses 708000 Net Operating Income 622000 2(a) Variable Costing product cost 24 2(b) High Country Inc Variable costing Income Statement Sales 2765000 Variable Expenses Variable Cost of goods sold 840000 Variable Selling expenses 140000 980000 Contrbution Margin 1785000 Fixed Expenses Fixed Manufacturing overhead 680000 Fixed Selling and administrative expenses 568000 1248000 Net Operating Income 537000 Explanation 1(a) Unit product cost under absorption costing: Direct materials 15 Direct Labor 7 Variable manufacturing overhead 2 Fixed manufacturing overhead cost 680000/40000 17 Absorption costing unit product cost 41 1(B) Sales (79*35000) 2765000 Cost of goods sold (41*35000) 1435000 Gross margin 1330000 Selling and administrative expenses (4*35000+568000) 708000 Net operating income 622000 2(a) Direct materials 15 Direct Labor 7 Variable manufacturing overhead 2 Variable Costing product cost 24 2(b) Sales (79*35000) 2765000 Cost of goods sold (24*35000) 840000 Variable Selling expenses (35000*4) 140000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.