Question

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 grill that it sells for $210. Data for last year's operations follow: 0 10,300 9,500 800 $ 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 60 36 15 17 128 $ $339,900 505,000 $844,900 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 for last year.

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

A B Answer 2 3 1995000 1368000 627000 4 Chuck Wagon Grills Inc. 5 Absorption Costing Income Statement 5 Sales (9500*210) 7 Cost of goods sold (((60+36+15+)+(339900/10300)) *9500) 3 Gross Margin Selling and adminstartive expenses (505000+(17*9500)) o Net Operating Income (loss) 1 2 3 666500 -39500 0 Nm 4