Variable Costing Unit Product Cost and Income Statement; Break-Even
CompuDesk. Inc. makes an oak dek specially designed for personal computers. The desk sellsfor $200. Data for last year’s operation- follow:
Units in beginning inventory | 0 |
Units produced | 10,000 |
Units sold | 9,000 |
Units in ending inventory | 1,000 |
Variable costs per unit: | |
Direct materials | $ 60 |
Direct labor | 30 |
Variable manufacturing overhead | 10 |
Variable selling and administrative | 20 |
Total variable cost per unit | $120 |
Fixed costs: | |
Fixed manufacturing overhead | $300,000 |
Fixed selling and administrative | 450,000 |
Total fixed costs | $750.000 |
Required:
1. Assume that the company uses variable costing. Compute the unit product cost for one computer desk.
2. Assume that the company uses variable costing. Prepare a contribution format income statement of the year.
3. What is the company’s break-even point in terms of units sold?
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