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: 10,400 8,200 2,200 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative 60 40 10 30 Total variable cost per unitS 140 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative Total fixed costs 180,000 860,00 $1,040,000 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 ?R thP rnmna nv's hrenk.even nint in terms of the numher (f harhaelae nrilk sold?

Explanation / Answer

Answer:-1)-

Unit product cost under variable costing for one barbecue grill:-Direct materials + Direct Labor+ Variable manufacturing overhead

=$60+$40+$10= $110 per unit

2)-

3)-Break even unit=Fixed costs/Contribution margin per unit

=$1040000/($300 per unit - $140 per unit)

=$1040000/$160 per unit

=6500 units

Chuck Wagon Grills Inc. Income statement using variable costing Particulars Amount $ Sales (a) 8200 units*$300 per unit 2460000 Less:- Variable cost of goods sold (b) Opening inventory Add:- Variable cost of goods manufatured 10400 units*110 per unit 1144000 Variable cost of goods available for sale 1144000 Less:- Closing inventory 2200 units*$110 per unit 242000 902000 Gross contribution margin C= a-b 1558000 Less:-Variable selling expenses 8200 units*$30 per unit 246000 Contribution margin 1312000 Less:- Period Expenses Fixed manufacturing overhead 180000 Fixed Selling & Administrative overhead 860000 Net Opreating Income 272000

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