High Country, Inc., produces and sells many recreational products. The company has just opened a new plant
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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
Beginning inventory | 0 | |
Units produced | 36,000 | |
Units sold | 31,000 | |
Selling price per unit | $ | 79 |
Selling and administrative expenses: | ||
Variable per unit | $ | 3 |
Fixed (per month) | $ | 563,000 |
Manufacturing costs: | ||
Direct materials cost per unit | $ | 18 |
Direct labor cost per unit | $ | 9 |
Variable manufacturing overhead cost per unit | $ | 4 |
Fixed manufacturing overhead cost (per month) | $ | 720,000 |
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.
Related Book For
Principles of Taxation for Business and Investment Planning 2016 Edition
ISBN: 9781259549250
19th edition
Authors: Sally Jones, Shelley Rhoades Catanach
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