1: assume the company uses a Absorption cost A) determine the unit product cost

Question

1: assume the company uses a Absorption cost A) determine the unit product cost B) prepare an income statement for May
2:Addume the company uses variable costing A)determine the unit product costing B) prepare a contribution format income statement 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 Unita produced Units sold Selling price per unit Selling and administrative expenses: 10,000 8,000 75 Variable per unit Pixed (per month) $ 200,000 Manufacturing costs 20 Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit$ Fixed manufacturing overhead cost (per month) 100,000 Management is anxious to assess the profitability of the new camp 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. Pree 1 of 2 Next > 17 12 15

Explanation / Answer

1a Direct materials 20 Direct labor 8 Variable manufacturing overhead 2 Fixed manufacturing overhead 10 =100000/10000 Unit product cost 40 1b Sales 600000 Cost of goods sold 320000 Gross profit 280000 Selling and administrative expenses 248000 Net operating income 32000 2a Direct materials 20 Direct labor 8 Variable manufacturing overhead 2 Unit product cost 30 2b Sales 600000 Variable expenses: Variable cost of goods sold 240000 Variable selling and administrative expenses 48000 288000 Contribution margin 312000 Fixed expenses: Fixed manufacturing overhead 100000 Fixed selling and administrative expenses 200000 300000 Net operating income 12000

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