Question

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:

  

Units in beginning inventory		0
Units produced		10,300
Units sold		9,500
Units in ending inventory		800
Variable costs per unit:
Direct materials		$   64
Direct labor		39
Variable manufacturing overhead		11
Variable selling and administrative		19
Total variable cost per unit		$ 133
Fixed costs:
Fixed manufacturing overhead	$	319,300
Fixed selling and administrative		505,000
Total fixed costs	$	824,300

  

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.

     

Answer 1