In: Accounting
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 price per unit | $ | 84 |
Selling and administrative expenses: | ||
Variable per unit | $ | 3 |
Fixed (per month) | $ | 563,000 |
Manufacturing costs: | ||
Direct materials cost per unit | $ | 14 |
Direct labor cost per unit | $ | 9 |
Variable manufacturing overhead cost per unit | $ | 4 |
Fixed manufacturing overhead cost (per month) | $ | 792,000 |
Management is anxious to assess the profitability of the new camp cot during the month of May.
Required:
a. Prepare an income statement for May.
b. Prepare a contribution format income statement for May.