value 20.00 points Chuck Wagon Grills, Inc., makes a single product-a handmade s
ID: 2521930 • Letter: V
Question
value 20.00 points 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 Units produced Units sold Units in ending inventory Variable costs per unit 10,400 9,300 1,100 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 62 36 14 19 Total variable cost per unit $ 131 Fixed costs Fixed manufacturing overhead 291.200 Fixed selling and administrative 520,000 Total fixed costs S 811,200 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. Chuck Wagon Grills, Inc. Absorption Costing Income Statement Net operating income (loss)Explanation / Answer
a) unit Product cost - Absorption costing
cost per unit= Variable costs per unit + Fixed cost per unit
Particulars
$
Variable cost per unit (given)
131
Less: Variable selling cost
(19)
Total fixed Over heads
$291200
Units produced
10400 units
Fixed cost per unit
$28 per unit
Cost per unit
$140(131+28-19)
b) Income statement-ABSORPTION COSTING
Particulars
$
$
Sales
210*9300
1953000
Less: Cost of goods sold
140*9300
(1302000)
Gross Profit
651000
Less : Selling cost
(696700)
Net Income/(loss)
(45700)
b) Absorption costing Income statement
Particulars
$
Variable cost per unit (given)
131
Less: Variable selling cost
(19)
Total fixed Over heads
$291200
Units produced
10400 units
Fixed cost per unit
$28 per unit
Cost per unit
$140(131+28-19)
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