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Chuck Wagon Grills, Inc., makes a single producta handmade specialty barbecue grill that it sells for $200. Data for last years operations follow: Units in
Chuck Wagon Grills, Inc., makes a single producta handmade specialty barbecue grill that it sells for $200. Data for last years operations follow:
Units in beginning inventory | 0 | |
Units produced | 9,600 | |
Units sold | 8,700 | |
Units in ending inventory | 900 | |
Variable costs per unit: | ||
Direct materials | $ | 80 |
Direct labor | 40 | |
Variable manufacturing overhead | 10 | |
Variable selling and administrative | 30 | |
Total variable cost per unit | $ | 160 |
Fixed costs: | ||
Fixed manufacturing overhead | $ | 180,000 |
Fixed selling and administrative | 180,000 | |
Total fixed costs | $ | 360,000 |
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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