Question
In: Accounting
Problem 7-20 Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in...
Problem 7-20 Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in Net Operating Income [LO7-1, LO7-2, LO7-3]
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 plant’s operation:
| Beginning inventory | 0 | |
| Units produced | 49,000 | |
| Units sold | 44,000 | |
| Selling price per unit | $ | 76 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 3 |
| Fixed (per month) | $ | 561,000 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 17 |
| Direct labor cost per unit | $ | 10 |
| Variable manufacturing overhead cost per unit | $ | 3 |
| Fixed manufacturing overhead cost (per month) | $ | 882,000 |
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.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Problem 6-20 Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in...
Problem 6-20 Variable and Absorption Costing Unit Product Costs
and Income Statements; Explanation of Difference in Net Operating
Income [LO6-1, LO6-2, LO6-3]
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 plant’s operation:
Beginning
inventory
0
Units
produced
40,000
Units sold
35,000
Selling price...
Problem 6-20 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference...
Problem 6-20 (Algo) Variable and Absorption Costing Unit Product
Costs and Income Statements; Explanation of Difference in Net
Operating Income [LO6-1, LO6-2, LO6-3]
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 plant’s operation:
Beginning inventory
0
Units produced
44,000
Units sold
39,000
Selling...
Problem 6-18B Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in...
Problem 6-18B Variable and Absorption Costing Unit Product Costs
and Income Statements; Explanation of Difference in Net Operating
Income [LO6-1, LO6-2, LO6-3]
McCracken Aerial, Inc., produces and sells a unique type of TV
antenna. The company has just opened a new plant to manufacture the
antenna, and the following cost and revenue data have been provided
for the first month of the plant’s operation:
Beginning
inventory
0
Units produced
51,750
Units sold
45,000
Selling price per
unit...
Problem 6-20A Variable and Absorption Costing Unit Product Costs and Income Statements; Explanation of Difference in...
Problem 6-20A Variable and Absorption Costing Unit Product Costs
and Income Statements; Explanation of Difference in Net Operating
Income [LO6-1, LO6-2, LO6-3] 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 plant’s operation: Beginning inventory 0
Units produced 36,000 Units sold 31,000 Selling price...
Problem 7-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LO7-2] Haas Company...
Problem 7-18 Variable and Absorption Costing Unit Product Costs
and Income Statements [LO7-1, LO7-2]
Haas Company manufactures and sells one product. The following
information pertains to each of the company’s first three years of
operations:
Variable costs per unit:
Manufacturing:
Direct materials
$
26
Direct labor
$
18
Variable manufacturing
overhead
$
9
Variable selling and
administrative
$
1
Fixed costs per year:
Fixed manufacturing
overhead
$
540,000
Fixed selling and administrative
expenses
$
120,000
During its first year of...
Problem 7-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LO7-2] Haas Company...
Problem 7-18 Variable and Absorption Costing Unit Product Costs
and Income Statements [LO7-1, LO7-2]
Haas Company manufactures and sells one product. The following
information pertains to each of the company’s first three years of
operations:
Variable costs per unit:
Manufacturing:
Direct materials
$
29
Direct labor
$
21
Variable manufacturing overhead
$
5
Variable selling and administrative
$
1
Fixed costs per year:
Fixed manufacturing overhead
$
330,000
Fixed selling and administrative expenses
$
150,000
During its first year of...
Problem 7-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LO7-2] Haas Company...
Problem 7-18 Variable and Absorption Costing Unit Product Costs
and Income Statements [LO7-1, LO7-2]
Haas Company manufactures and sells one product. The following
information pertains to each of the company’s first three years of
operations:
Variable costs per unit:
Manufacturing:
Direct materials
$
29
Direct labor
$
21
Variable manufacturing overhead
$
9
Variable selling and administrative
$
3
Fixed costs per year:
Fixed manufacturing overhead
$
420,000
Fixed selling and administrative expenses
$
180,000
During its first year of...
Problem 6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] Haas Company...
Problem 6-18 Variable and Absorption Costing Unit Product Costs
and Income Statements [LO6-1, LO6-2]
Haas Company manufactures and sells one product. The following
information pertains to each of the company’s first three years of
operations:
Variable costs per unit:
Manufacturing:
Direct materials
$
28
Direct labor
$
20
Variable manufacturing overhead
$
4
Variable selling and administrative
$
3
Fixed costs per year:
Fixed manufacturing overhead
$
210,000
Fixed selling and administrative expenses
$
150,000
During its first year of...
Problem 6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] Haas Company...
Problem 6-18 Variable and Absorption Costing Unit Product Costs
and Income Statements [LO6-1, LO6-2]
Haas Company manufactures and sells one product. The following
information pertains to each of the company’s first three years of
operations:
Variable costs per unit:
Manufacturing:
Direct materials
$
20
Direct labor
$
12
Variable manufacturing overhead
$
7
Variable selling and administrative
$
3
Fixed costs per year:
Fixed manufacturing overhead
$
110,000
Fixed selling and administrative expenses
$
50,000
During its first year of...
Problem 6-18A Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] Haas Company...
Problem 6-18A Variable and Absorption Costing Unit Product Costs
and Income Statements [LO6-1, LO6-2]
Haas Company manufactures and sells one product. The following
information pertains to each of the company’s first three years of
operations:
Variable costs per unit:
Manufacturing:
Direct materials
$24
Direct labor
$16
Variable manufacturing
overhead
$4
Variable selling and
administrative
$1
Fixed costs per year:
Fixed manufacturing overhead
$
220,000
Fixed selling and administrative
expenses
$
140,000
During...
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