Question

Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for $205. Data for last year’s operations follow:

Units in beginning inventory		0
Units produced		9,700
Units sold		9,100
Units in ending inventory		600
Variable costs per unit:
Direct materials	$	62
Direct labor		32
Variable manufacturing overhead		10
Variable selling and administrative		15
Total variable cost per unit	$	119
Fixed costs:
Fixed manufacturing overhead	$	329,800
Fixed selling and administrative		525,000
Total fixed costs	$	854,800

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

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