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 overhead 20 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 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.
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 overhead 20 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 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 |
20 | |
| 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 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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