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 marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit 42,000 37,000 $85 $4 $562,000 Fixed per month Manufacturing costs: Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost per month $15 $8 $2 $798,000 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

Explanation / Answer

1a) Unit product cost under absorption costing:

b) Income statement for May

2a) Unit product cost under variable costing

b) Income Statement

Direct mateials cost per unit $15 Direct labor cost per unit $8 variable manufacturing cost per unit $2 Fixed manufacturing overhead per unit $19 Total cost per unit $44

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