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 0 Units produced 40,000 Units sold 35,000 Selling price per unit $ 83 Selling and administrative expenses: Variable per unit $ 3 Fixed (per month) $ 570,000 Manufacturing costs: Direct materials cost per unit $ 15 Direct labor cost per unit $ 10 Variable manufacturing overhead cost per unit $ 3 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.

Question

Today at 5:59 AM
Business

Answered

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 0 Units produced 40,000 Units sold 35,000 Selling price per unit $ 83 Selling and administrative expenses: Variable per unit $ 3 Fixed (per month) $ 570,000 Manufacturing costs: Direct materials cost per unit $ 15 Direct labor cost per unit $ 10 Variable manufacturing overhead cost per unit $ 3 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.

Answer :

Other Questions

Corporation has 11,900 shares of $100 par value, 7%, preferred stock and 45,000 shares of $10 par value common stock outstanding at December 31, 2020. Answer th

The potential advantages of centralized purchasing, as it is commonly done by large chain operations, include all of the following except: a) the presence of a

A certificate of deposit often charges a penalty for withdrawing funds before the maturity date. If the penalty involves two months of interest, what would be t

How much money should be deposited annually in a bank account for five years if you wish to withdraw $5 comma 500 each year for three years, beginning five ye

On January 1, Year 1, Pacific Corporation acquired 75% of Sand Corporation's 200,000 outstanding common shares for $2,850,000. On January 1, the book value of S

state the two laws of reflection of light

difference between silkmoth and honeybee

What is the aquatic larval stage in a frogs development?

which of the following is additive inverse of -32a) -32b) 32c) 0d) 1

Which of the x values are solutions to the inequality 4(2 – x) > –2x – 3(4x + 1)? Check all that apply.

Gauthier and coworkers' experiment on experience-dependent plasticity showed that after extensive "Greeble recognition" training sessions, FFA neurons had a(n)

On September 1, Consulting Company began a contract to provide services to Willowwood Company for six months, with the total $21,600 payment to be made at the e

If some of the bromine/methylene chloride mixture spills on you, what actions should you take? (choose all that apply) a. Remove your gloves and/or lab coat if

Doris, an eighty-seven-year-old widow, collapsed while shopping at a store. She was taken to the Detroit city hospital by ambulance. She stayed there for fourte

Examples of conjunctive communication include (1) "Relating to what you just said, I'd like to discuss this." (2) "... so, that's how I see it. So what is your

Suppose a soup can is made from a sheet of steel19 which is .13 mm thick. If the can is 11 cm high and 6 cm in diameter, use differentials to estimate the mass

In the month of April, the Forming Department had 500 units in beginning work in process inventory that were 60% complete. These units had $60,000 of materials

Researchers call random radio listeners on the phone to rank five different popular songs. This research helps radio stations decide which songs to play more of

Researchers have offered a variety of reasons for cultural prohibitions from eating certain meats. One explanation from an anthropological point of view for why

Which of the following is true of oil? a. Oil was discovered by Baron von Drusenberg of Austria in the later eighteenth century b. The United States imports abo

facundobuzzetti facundobuzzetti · Answer 1 · 2025-03-23T06:03:25-04:00

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Units produced 40,000 Units sold 35,000

Selling price per unit $ 83

Selling and administrative expenses:

Variable per unit $ 3

Fixed (per month) $ 570,000

Manufacturing costs:

Direct materials cost per unit $ 15

Direct labor cost per unit $ 10

Variable manufacturing overhead cost per unit $ 3

Fixed manufacturing overhead cost (per month) $ 720,000

1) A) Absorption costing= direct material + direct labor + variable overhead + fixed overhead

Absorption costing= 15 + 10 + 3 + (720,000/40,000)= $46

B) Income statement:

Sales= 35,000* 83= 2,905,000

COGS= 46*35,000= (1,610,000)

Gross profit= 1,295,000

Selling and administrative expenses= 3*35,000 + 570,000= (675,000)

Net operating income= 620,000

2) A) variable cost= direct material + direct labor + variable overhead + variable selling and administrative

unitary variable cost= 15 + 10 + 3 + 3= 31

B) income statement:

Sales= 2,905,000

Variable cost= 31*35,000= (1,085,000)

Contribution margin= 1,820,000

Fixed costs:

Fixed manufacturing overhead cost= (720,000)

Fixed selling and administrative= (570,000)

Net operating income= 530,000