Chuck Wagon Grills, Inc., makes a single product-a handmade specialty barbecue g

Question

Chuck Wagon Grills, Inc., makes a single product-a handmade specialty barbecue grill that it sells for $300. Data for last year's operations follow: Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: 10,000 8,900 1,100 Direct materials Direct labor Variable manufacturing overhead Variable seling and administrative Total variable cost per unit 80 20 10 30 140 Fixed costs Fixed manufacturing overhead Fixed selling and administrative Total fixed costs $200,000 760,000 $ 960,000 Required 1. Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill Unit product cost

Explanation / Answer

1) Unit product cost :

2) Variable costing income statement :

3) Break even point = 960000/(300-140) = 6000 Units

Direct material 80 Direct labour 20 Variable manufacturing overhead 10 Unit product cost 110

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