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:

    Management is anxious to see how profitable the new camp cot will be and has asked that an income statement be prepared for May.

1.)

Determine the unit product cost.

prepare an income statement for May

2.)

Prepare a contribution format income statement for May.

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:

Explanation / Answer

1a Direct materials 16 Direct labor 8 Variable manufacturing overhead 2 Fixed manufacturing overhead 18 =792000/44000 Unit product cost 44 b Sales 3081000 =39000*79 Cost of goods sold 1716000 =39000*44 Gross profit 1365000 Selling and administrative expenses 682000 =(39000*3)+565000 Net operating income 683000 2a Direct materials 16 Direct labor 8 Variable manufacturing overhead 2 Unit product cost 26 b Sales 3081000 Variable expenses: Variable cost of goods sold 1014000 Variable selling and administrative expenses 117000 1131000 Contribution margin 1950000 Fixed expenses: Fixed manufacturing overhead 792000 Fixed selling and administrative expenses 565000 1357000 Net operating income 593000

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