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 $215. Data for last year's operations follow: Units in beginning inventory Units produced Units sold Units in Variable costs per unit: 9,700 9,100 600 ending inventory 63 38 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit 15 127 Fixed costs Fixed manufacturing overhead Fixed selling and administrative Total fixed costs $329,800 510,000 $839,800 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 for last year.

Explanation / Answer

1) Unit product cost :

b) Income statement :

direct material 63 Direct labour 38 Variable manufacturing overhead 11 Fixed manufacturing overhead (329800/9700) 34 Unit product cost 146

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