Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue g
ID: 2653202 • Letter: C
Question
Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for $200. Data for last year’s operations follow:
Units in beginning inventory 0
Units produced 9,700
Units sold 9,100
Units in ending inventory 600
Variable costs per unit:
Direct materials $ 63
Direct labor 35
Variable manufacturing overhead 12
Variable selling and administrative 15
Total variable cost per unit $ 125
Fixed costs:
Fixed manufacturing overhead $ 281,300
Fixed selling and administrative 510,000
Total fixed costs $ 791,300
Required:
1.
Assume that the company uses absorption costing. Compute the unit product cost for one barbecue grill.
2.
Assume that the company uses absorption costing. Prepare an income statement.
Explanation / Answer
1) Under absorption costing, Closing inventory include Fixed costs. Statement showing unit product cost Particulars Amount Variable costs: Direct Materials 63.00 Direct Labour 35.00 Variable Manufacturing 12.00 Variable selling and admin 15.00 Total VC per unit 125.00 Fixed Costs: Fixed Manu O/h(281300/9700) 29.00 Fixed sellinh and admin(510000/9700) 52.58 Total Fixed costs per unit 81.58 Total cost per unit sold(VC+FC) 206.58 2) Statement showing income Particulars Amount Selling price(9100*200) 1,820,000.00 Variable costs: Direct Materials(63*9700) 611,100.00 Direct Labour(35*9700) 339,500.00 Variable Manufacturing(12*9700) 116,400.00 Total VC or Prime Costs 1,067,000.00 Fixed Costs: Fixed Manu O/h 281,300.00 Fixed sellinh and admin 510,000.00 Total Fixed costs 791,300.00 Total costs(FC+VC) or Factory cost 1,858,300.00 Less : Closing Stock(1858300/9700*600) 114,946.39 Cost of goods sold 1,743,353.61 Variable selling and admin(15*9100) 136,500.00 Costs to sell 1,879,853.61 Profit(Sales- cost) (59,853.61)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.