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: Direct materials 0 10,100 8,100 2,000 60 Direct labor 20 10 30 Variable manufacturing overhead Variable selling and administrative Total variable cost per unit $120 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $ 210,000 1,230,000 Total fixed costs $1,440,000 Required: 1. Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill. Unit product cost $ 90

Answer 1

Unit Product cost $ 90 Calculation: $20 Direct Materials Direct Labor Variable manufacturing Overhead Unit Product wat using variable costing $ 1o $ 90 (2) Chuck wagon Variable costing Grills inc. income Statement $ 2,430,000 Sales Less: Variable expenses Variable cost of goods sold Variable selling and administrative & 729,000 243.000 $ 972,000 $ 1,450,000 Contribution margin Less: fixed expenses: fixed Manufacturing overhead 1 & 210,ooo Aired selling and adminitrative & 1, 230,000 $ 1,440,000 $ 18,000 Net operating Income Calculation : sales selling Price per unit & = Units sold x 8, 100 × $300 $ 2,430,000 W

Variable Variable cost of goods sold = = Units sold Untts sold x Unit Product Cost on = 8,100 x $90 = $729,000 selling and administrative & Units sold & Variable selling and administrative Coat per unit - 8,100 $30 - $ 243,000 Break-even Point 8,000 units Calculation : Break-even point in units Fired expenses Contribution Margin Perunit = contribution margin per unit - Sales Price per unit- Variable cost perunit & 300 - $120 $ 180 = = Novo, Break-even point $180 = = & 1, 440,000 & 8,000 units