Question
3) Chuck Wagon Grills, Inc., makes a single producta handmade specialty barbecue grill that it sells for $210. Data for last years operations follow: Units
3) Chuck Wagon Grills, Inc., makes a single producta handmade specialty barbecue grill that it sells for $210. Data for last years operations follow:
Units in beginning inventory | 0 |
Units produced | 20,000 |
Units sold | 19,000 |
Units in ending inventory | 1,000 |
Variable costs per unit: |
|
Direct materials | 50 |
Direct labor | 80 |
Variable manufacturing overhead | 20 |
Variable selling and administrative | 10 |
Total variable cost per unit | 160 |
Fixed costs: |
|
Fixed manufacturing overhead | $700,000 |
Fixed selling and administrative | 285,000 |
Total fixed costs | $985,000 |
Required:
1. Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill.
2. Assume that the company uses variable costing. Prepare a contribution format income statement for last year.
3. What is the companys break-even point in terms of the number of barbecue grills sold?
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