Question

Homework 0 Saved 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: 9,800 8,800 1,000 60 40 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs Fixed manufacturing overhead Fixed selling and administrative Total fixed costs 10 30 140 $ 160,000 640,000 $ 800,000 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 last year. 3. What is the company's break-even point in terms of the number of barbecue grills sold?

Answer 1

Paart-1 Compuation of Unit Product cost- Variable Costing
	$
Direct Material	$60.00
Direct labour	$40.00
Variable Manufacturing overheads	$10.00
Variable Product cost	$110.00
Part-2: The Variable Costing Income Statement
	$
No. of Unit Sold	8800
Sales @$300	$1,760,000
Less: Variable cost
variable Manaufacturing cost @$110	$968,000.00
Variable Selling & Admin cost @30	$264,000.00
Contribution margin	$528,000.00
Fixed expense:
Fixed Manufacturing cost	$160,000.00
Fixed Selling & Admin Cost	$40,000.00
Net operating Income	$328,000.00
Part-3
BreakEven point =Fixed Cost / Contribution Margin Per Unit
=(160000+40000)/(300-140)=1250 Unti