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.
Beginning inventory 0
Units produced 46,000
Units sold 41,000
Selling price per unit $82
Selling and administrative expenses:
Variable per unit $4
Fixed per month $ 555,000
Manufacturing costs:
Direct materials cost per unit $17
Direct labor cost per unit $9
Variable manufacturing overhead cost per unit $2
Fixed manufacturing overhead cost per month $ 828,000
Management is anxious to see how profitable the new camp cot will be and has asked that an income statement be prepared for May.
The contribution format is a presentation format used for the income announcement, where all variable fees are aggregated and deducted from revenue a good way to arrive at a contribution margin, and then all fixed charges are deducted from the contribution margin in order to arrive at the internet earnings or loss.
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