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Chuck Wagon Grills, Inc., makes a single producta handmade specialty barbecue grill that it sells for $215. Data for last years operations follow:
| | | |
| Units in beginning inventory | | 0 |
| Units produced | | 9,800 |
| Units sold | | 9,100 |
| Units in ending inventory | | 700 |
| Variable costs per unit: | | |
| Direct materials | $ | 63 |
| Direct labor | | 39 |
| Variable manufacturing overhead | | 12 |
| Variable selling and administrative | | 21 |
| Total variable cost per unit | $ | 135 |
| Fixed costs: | | |
| Fixed manufacturing overhead | $ | 313,600 |
| Fixed selling and administrative | | 520,000 |
| Total fixed costs | $ | 833,600 |
| |
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.
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