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Chuck Wagon Grills, Inc., makes a single product-a handmade specialty barbecue grill that it sells for $200. Data for last year's operations follow:
Units in beginning inventory
0
Units produced
10,000
Units sold
8,300
Units in ending inventory
1,700
Variable costs per unit:
Direct materials
$
60
Direct labor
40
Variable manufacturing overhead
10
Variable selling and administrative
30
Total variable cost per unit
140
Fixed costs:
Fixed manufacturing overhead
160,000
Fixed selling and administrative
230,000
Total fixed costs
390,000
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.
Variable costing income statement
3. What is the company's break-even point in terms of the number of barbecue grills sold?
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