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 plantâs operation:
Beginning inventory 0
Units produced 10,000
Units sold 8,000
Selling price per unit $75
Selling and administrative expenses:
Variable per unit $6
Fixed per month $ 200,000
Manufacturing costs:
Direct materials cost per unit $20
Direct labor cost per unit $8
Variable manufacturing overhead cost per unit $2
Fixed manufacturing overhead cost per month $ 100,000
Management is anxious to see how profitable the new camp cot will be and has asked that an income statement be prepared for May.
Required:1. Assume that the company uses absorption costing.
a. Determine the unit product cost.
b. Prepare an income statement for May