Prepare a contribution format income statement for the year

Reference no: EM131928127

Problem

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	9,700
Units sold	8,500
Units in ending inventory	1,200
Variable costs per unit:
Direct materials	$ 80
Direct labor	20
Variable manufacturing overhead	10
Variable selling and administrative	30
Total variable cost per unit	$ 140
Fixed costs:
Fixed manufacturing overhead	240,000
Fixed selling and administrative	960,000
Total fixed costs	1,200,000

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 the year.

3. What is the company's break-even point in terms of the number of barbecue grills sold?

Reference no: EM131928127

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