9 2.24 points Exercise 6-15 Absorption Costing Unit Product Cost and Income Stat

Question

9 2.24 points Exercise 6-15 Absorption Costing Unit Product Cost and Income Statement L06-1, LO6-2] Chuck Wagon Grills, Inc., makes a single product a handmade specialty barbecue grillthat it solls for $215. Data for last year's operations follow: Units in Units produced Units sold Units in ending inventory 10,100 9,200 S 63 Direct materials Direct labor e manufacturing 15 Variable selling and administrative $ 131 Fixed costs: S 282,800 515,000 Fixed selling and administrative Total fixed costs $797,800 Required 1. Assume that the company uses absorption costing. Compute the unit product cost for one barbecue grill Unit product cost S 139 5

Explanation / Answer

1) unit product cost under Absorption costing Direct materials 63 Direct labor 33 Variable manufacturing overhead 15 fixed manufacturing overhead (282800/10,100)= 28 unit product cost under Absorption costing 139 Absorption costing income statement Sales 1978000 cost of goods sold (9200*139) 1278800 Gross margin 699200 fixed selling and administrative expense (515000+9200*20) 699000 net operating income 200

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