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 for $215. Data for last year\'s operations follow: Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit 0 9.800 9,100 700 $ 63 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative 13 21 Total variable cost per unit $130 Fixed costs Fixed manufacturing overhead Fixed selling and administrative S 333,200 505,000 Total fixed costs S 838,200 Required 1. Assume that the company uses absorption costing. Compute the unit product cost for one barbecue grill Unit product cost 2. Assume that the company uses absorption costing. Prepare an income statement. Chuck Wagon Grills, Inc. Absorption Costing Income Statement Net operating income (loss)

Solution

1) Unit product cost :

b) Absorption costing income statement :

Direct material	63
direct labour	33
Variable manufacturing overhead	13
Fixed manufacturing overhead (333200/9800)	34
Unit product cost	143