Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for$210. Data for last year’s operations follow:Units in beginning inventory ................................ 0Units produced .................................................... 20,000Units sold ............................................................. 19,000Units in ending inventory ..................................... 1,000Variable costs per unit:Direct materials ................................................ $ 50Direct labor ....................................................... 80Variable manufacturing overhead .................... 20Variable selling and administrative .................. 10Total variable cost per unit ............................... $160Fixed costs:Fixed manufacturing overhead ........................ $700,000Fixed selling and administrative ....................... 285,000Total fixed costs ............................................... $985,000Required: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 forthe year.
Chuck Wagon Grills, Inc., makes a single product—a handmade specialty barbecue grill that it sells for
$210. Data for last year’s operations follow:
Units in beginning inventory ................................ 0
Units produced .................................................... 20,000
Units sold ............................................................. 19,000
Units in ending inventory ..................................... 1,000
Variable costs per unit:
Direct materials ................................................ $ 50
Direct labor ....................................................... 80
Variable manufacturing
Variable selling and administrative .................. 10
Total variable cost per unit ............................... $160
Fixed costs:
Fixed manufacturing overhead ........................ $700,000
Fixed selling and administrative ....................... 285,000
Total fixed costs ............................................... $985,000
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.
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