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: 9,900 8,700 1,200 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit 60 20 10 30 120 Fixed costs: Fixed manufacturing overheacd Fixed selling and administrative Total fixed costs $ 200,000 1,240,000 $1,440,000 Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill Unit product cost Assume that the company uses variable costing. Prepare a contribution format income statement for last year Chuck Wagon Grills, Inc Variable Costing Income Statement What is the company's break-even point in terms of the number of barbecue grills sold? reak-even units

Explanation / Answer

a) Unit product cost :

b) variable costing income statement :

c) Break even point = 1440000/(300-120) = 8000 Units

Direct material 60 Direct labour 20 Variable manufacturing overhead 10 Unit product cost 90

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