Question

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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: 9,900 8,400 1,500 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs: Fixed manufacturing overhead Fixed selling and administrative Total fixed costs 80 40 10 30 $ 160 $ 200,000 60,000 $ 260,000 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 is the company's break-even point in terms of the number of barbecue grills sold? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill. Unit product cost

Answer 1

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Answers are highlighted in yellow: Naming convention is not available, can be slightly different: Solution: 1) Unit product cost = (80+40+10) $ 130 2) 2 1680000 1092000 1092000 Variable Costing Income Statement Sales (8400*200) Variable Expenses: Variable Cost of goods sold: Beginning Inventory Add: Variable Manufacturing Costs (8400*130) Goods available for sales Less: Ending Inventory (1500*130) Variable Cost of goods sold Variable Selling and admin expenses (8400*30) Contribution Margin Fixed Expenses: Fixed Manufacturing overhead Fixed Selling and Administrative Expense Net Operating income (loss) 195000 897000 252000 1149000 531000 200000 60000 260000 271000 3) Break-even units sales = (Fixed cost / Contribution margin per unit) Break-even units sales = (260000)/(531000/8400) = 4113