High Country, Inc., produces and sells many recreationalproducts. The company has just opened a new plant to produce afolding camp cot that will be marketed throughout the UnitedStates. The following cost and revenue data relate to May, thefirst month of the plant’s operation: Beginning inventory 0 Unitsproduced 44,000 Units sold 39,000 Selling price per unit $ 80Selling and administrative expenses: Variable per unit $ 2 Fixed(per month) $ 566,000 Manufacturing costs: Direct materials costper unit $ 15 Direct labor cost per unit $ 9 Variable manufacturingoverhead cost per unit $ 3 Fixed manufacturing overhead cost (permonth) $ 748,000 Management is anxious to assess the profitabilityof 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 forMay.
2. Assume that the company uses variable costing. a. Determinethe unit product cost. b. Prepare a contribution format incomestatement for May.
