PROBLEM $6-20$ Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in

Net Operating Income $[$

High Country, Inc., produces and sells many recreational products. The company 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

Fixed $($per month$)$

Required:

Assume the company uses absorption costing.

a$.$ Calculate the camp cot$\text{'}$s unit product cost.

b$.$ Prepare an income statement for May.

Assume the company uses variable costing.

a$.$ Calculate the camp cot$\text{'}$s unit product cost.

b$.$ Prepare a contribution format income statement for May.

Explain the reason for any difference in the ending inventory balances under the two costing methods and the impact of this difference

on reported net operating income.