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Chuck Wagon Grills, Inc., makes a single producta handmade specialty barbecue grill that it sells for $200. Data for last years operations follow:
| | | |
| Units in beginning inventory | | 0 |
| Units produced | | 10,200 |
| Units sold | | 8,100 |
| Units in ending inventory | | 2,100 |
| 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 | $ | 160,000 |
| Fixed selling and administrative | | 160,000 |
| Total fixed costs | $ | 320,000 |
|
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 companys break-even point in terms of the number of barbecue grills sold?
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