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Chuck Wagon Grills, Inc., makes a single producta handmade specialty barbecue grill that it sells for $205. Data for last years operations follow:
| | | |
| Units in beginning inventory | | 0 |
| Units produced | | 10,100 |
| Units sold | | 9,400 |
| Units in ending inventory | | 700 |
| Variable costs per unit: | | |
| Direct materials | $ | 62 |
| Direct labor | | 36 |
| Variable manufacturing overhead | | 11 |
| Variable selling and administrative | | 20 |
| Total variable cost per unit | $ | 129 |
| Fixed costs: | | |
| Fixed manufacturing overhead | $ | 353,500 |
| Fixed selling and administrative | | 510,000 |
| Total fixed costs | $ | 863,500 |
|
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 a contribution format income statement for last year.
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