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: 9,600 8,800 800 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit 80 4 0 10 30 160 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative Total fixed costs ? 150,000 970,000 $1,120,000 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 company's break-even point in terms of the number of barbecue grills sold?

Explanation / Answer

1) Unit product cost ;

2) Income statement :

3) Break evven point = 1120000/(300-160) = 8000 Units

Direct material 80 Direct labour 40 Variable manufacturing overhead 10 Total unit product cost 130

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