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 Units produced Units sold Units in ending inventory Variable costs per unit: in beginning inventory 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 overhead Fixed selling and administrative Total fixed costs $ 200,000 1,240,000 $1,440,000 Assume that the company uses variable costing. Prepare a contribution format income statement for last year. Chuck Wagon Grills, Inc. Variable Costing Income Statement

Explanation / Answer

Variable costing income statement :

Sales (8700*300) 2610000 Variable cost of goods sold Direct material 522000 Direct labour 174000 Variable manufacturing overhead 87000 783000 Manufacturing margin 1827000 Variable selling and administrative expense 261000 Contribution margin 1566000 Fixed Cost Fixed manufacturing cost 200000 FIxed selling and administrative expense 1240000 1440000 Net operating income 126000

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