Reference no: EM1317042

Question 5:      DDD Grills, Inc. makes a single product-a handmade  specialty barbeque grill that sells for $350.  Data for last year's  operations follow;

 

                                    Units in beginning inventory              0

                                    Units produced                       30,000

                                    Units sold                    25,000

                                    Units in ending inventory       5,000

 

                                    Variable costs per unit

                                    Direct materials                                   mce_markernbsp;       90

                                    Direct labor                                     120

                                    Variable manufacturing overhead                70

                                    Variable selling and administrative              20

                                    Total variable cost per unit                  $300

 

                                    Fixed costs:

                                    Fixed manufacturing overhead           $900,000

                                    Fixed selling and administrative         350,000

                                    Total fixed costs                     $1,250,000

 

                        Required:

a)      Compute the unit product cost for one barbeque grill for each of the costing methods described in Chapter 9.

b)      Prepare an income statement for the year using the absorption approach.

c)      Prepare an income statement for the year using the variable costing approach.