tpx Chuck Wagon Grills, Inc, makes a single product-a handmade specialty barbecu

Question

tpx 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 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit 10,300 8,200 2,100 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 60 20 10 30 Total variable cost per unit S 120 Fixed costs Fixed manufacturing overhead Fixed selling and administrative $ 160,000 920,000 Total fixed costs $ 1,080,000 Required 1. Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill. cost Assume that the company uses variable costing Prepare a contribution format income statement for the year 2 Chuck Wagon Grills, Inc Variable Costing Income Statement Variable expenses Fixed expenses

Explanation / Answer

a) Unit product cost :

b) Contribution format income statement :

Break even point :

Contribution margin per unit = 1476000/8200 = 180

Break even point = 1080000/180 = 6000 units

Direct material 60 Direct labour 20 Variable manufacturing overhead 10 Unit product cost 90

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