High Country, Inc., produces and sells many recreational products. The company h
ID: 2554069 • Letter: 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 0 45,000 40,000 $82 Variable per unit Fixed per month $3 $566,000 Manufacturing costs Direct materials cost per unit Direct labor cost per unt Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost per month $15 $7 $3 $720,000 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 costExplanation / Answer
Answer:
1-A
1a. The unit production cost under absoprtion costing:
DM
$ 15
DL
7
VMOH
3
Fixed MOH
16
$ 41
he unit production cost under absoprtion costing:$41
_______________________________________________
1b. Income statement under absorption costing:
$
Sales
3,280,000
COGS
1,640,000
Gross Margin
1,640,000
Selling and admin expenses
686,000
Net Income
954,000
__________________________________
2a. The unit production cost under variable costing:
$
DM
15
DL
7
VMOH
3
25
The unit production cost under variable costing =$25
______________________________
1b. Income statement under variable costing:
Sales
3,280,000
Variable expenses:
Variable COGS
1,000,000
Variable selling & admin expenses
120,000
Total variable expenses
1,120,000
Contribution margin
2,160,000
Fixed expenses:
Fixed MOH
720,000
Fixed selling & admin expenses
566,000
Total fixed expenses
1,286,000
Net operating income
874,000
1a. The unit production cost under absoprtion costing:
DM
$ 15
DL
7
VMOH
3
Fixed MOH
16
$ 41
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.