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: 10,300 9,200 1,100 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit 64 39 13 18 134 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative Total fixed costs $319,300 515,000 $834,300 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 for last year.

Solution

1) Unit product cost :

2) Income statement :

Direct material	64
Direct labour	39
Variable manufacturing overhead	13
Fixed manufacturing overhead (319300/10300)	31
Unit product cost	147