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:

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Units in beginning inventory 0    Units produced
10,400    Units sold 8,400    Units
in ending inventory 2,000    Variable costs per
unit:        Direct
materials $   60
       Direct labor 20
       Variable manufacturing
overhead 10        Variable
selling and administrative 30
        Total variable cost
per unit $ 120     Fixed
costs:        Fixed
manufacturing overhead$200,000
       Fixed selling and
administrative 880,000
        Total fixed
costs$1,080,000   

Required:
1.

Assume that the company uses variable costing. Compute the unit
product cost for one barbecue grill.


Unit product cost
2.

Assume that the company uses variable costing. Prepare a
contribution format income statement for the year.


Chuck Wagon Grills, Inc.

Variable Costing Income Statement

Sales
Variable expenses:

Variable cost of goods sold

Variable selling and administrative
Fixed expenses:

Fixed manufacturing overhead

Fixed selling and administrative
Net
operating income
3. What is the company’s break-even
point in terms of the number of barbecue grills sold?


Break-even point
units

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