Question
Exercise 6-15 Absorption Costing Unit Product Cost and Income Statement [LO6-1, LO6-2] Chuck Wagon Grills, Inc., makes a single producta handmade specialty barbecue grill that
Exercise 6-15 Absorption Costing Unit Product Cost and Income Statement [LO6-1, LO6-2] 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 absorption costing. Compute the unit product cost for one barbecue grill. 2. Assume that the company uses absorption costing. Prepare an income statement.
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