PROBLEM 6-20 Variable and Absorption Costing Unit Product Costs and Income Statements: Explanation of Difference in Net Operating Income L06-1, QL06-2, L06-3 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 plane's operation Heginning inventory 0 Units produced 10,000 Units sold 8.000 Selling price per unit 575 Selling and administrative expenses Variable per unit $6 Fixed (per month) $200,000 Manufacturing Costs Direct materials cost per unit $20 Direct labor cost per unit $$ Variable manufacturing overhead cost per unit $2 Fised manufacturing overhead cost (per month) $100.000 Mangement is anxious to assess the profitability of the new camp col during the month of May. Manufacturing costs: Direct materials cost per unit $20 Direct labor cost per unit $8 Variable manufacturing overhead cost per unit $2 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. Calculate the unit product cost. b. Prepare an income statement for May. 2. Assume that the company uses variable costing 1. Calculate the unit product cost. b. Prepare a contribution format income statement for May. 3. 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 Page 287