Chuck Wagon Grills Inc makes a single producta handmade spec

Chuck Wagon Grills, Inc., makes a single product-a handmade specialty barbecue grill that it sells tor $200. Data tor last year\'s operations follow Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: 10,400 8,800 1,600 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit 80 20 10 30 140 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative Total fixed costs 180,000 120,000 $ 300,000 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume that the company uses variable costing. Prepare a contribution format income statement for last year. Chuck Wagon Grills, Inc. Variable Costing Income Statement Sales S 1,760,000 ariable expenses Variable cost of goods sold Variable seling and administrative expenses Contribution margin 1,760,000 xed expenses Fixed manufacturing overheacd Fixed selling and administrative expenses Net operating income S 1,760,000

Solution

Requirement 1

Unit product cost = 80+20+10=110

Requirement 2

Variable cost income statement

Sales (8800*200) 1760000

Variable expenses:

Variable cost of goods sold (8800*110) 968000

Variable selling and administrative expenses (8800*30) 264000

Total variable expenses 360800

Contribution margin 1399200

Fixed expenses:

Fixed Manufacturing overhead 180000

Fixed selling and administrative 120000

Total fixed expenses 300000

Net operating income 1099200

Requirement 3

Breakeven in unit = fixed expenses/contribution margin per unit= (180000+120000)/(200-140)= 5000 barbecue grills