Question

Connect Assignment 3 (due 9/29): Read Instructions i Saved 42,eee 37,eee 81 $ 10 points Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (per month) $ 556,600 $ 15 eBook $ 798,eee References 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. Complete this question by entering your answers in the table below. Req 1A Reg 18 Reg 2A Reg 2A Reg 28 Prepare a contribution format income statement for May. Assume that the company uses variable costing. High Country, Inc. Variable Costing Income Statement Net operating income

Answer 1

1
a)	The Unit Product Cost Under Absorption Costing
		$
	Direct Material	15
	Direct Labor	6
	Variable Manufacturing Overhead	2
	Fixed Manufacturing Overhead ( $ 798,000 / 42,000 units produced )	19
	Unit Product Cost	42
b)	Absorption Costing Income statement
		$
	Sales ( 37,000 units * $ 81 )	29,97,000
	Cost of Goods Sold ( 37,000 units * $ 40 )	15,54,000
	Gross margin	14,43,000
	Selling and Administrative Expenses ( 37,000 * $ 2 ) + $ 556,000	6,30,000
	Net Operating Income	8,13,000
2
a)	The Unit Product Cost Under Absorption Costing
		$
	Direct Material	15
	Direct Labor	6
	Variable Manufacturing Overhead	2
	Unit Product Cost	23
b)	Variable Costing Income statement
		$	$
	Sales ( 37,000 units * $ 81 )		29,97,000
	Less :
	Variable Cost of Goods sold ( 37,000 units * $ 23 )	8,51,000
	Variable Selling and Administrative Expenses ( 37,000 * $ 2 )	74,000	9,25,000
	Contribution Margin		20,72,000
	Less :
	Fixed Manufacturing Overheads	7,98,000
	Fixed Selling and Administrative Expenses	5,56,000	13,54,000
	Net Operating Income		7,18,000