Question

Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for $300. Data for last year’s operations follow: Units in beginning inventory 0 Units produced 10,400 Units sold 8,200 Units in ending inventory 2,200 Variable costs per unit: Direct materials $ 80 Direct labor 40 Variable manufacturing overhead 10 Variable selling and administrative 30 Total variable cost per unit $ 160 Fixed costs: Fixed manufacturing overhead $ 190,000 Fixed selling and administrative 1,070,000 Total fixed costs $ 1,260,000 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?

Unit product cost

ssume that the company uses variable costing. Prepare a contribution format income statement for last year.

Chuck Wagon Grills, Inc.
Variable Costing Income Statement

Break-even point

units

Answer 1