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:

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 the year.

3.         What is the company’s break-even point in terms of the number of barbecue grills sold?

Units in beginning inventory Units produced 20,000 Units sold 19,000 Units in ending inventory 1,000 Variable costs per unit: $ 50 Direct materials Direct labor 80 Variable manufacturing overhead 20 Variable selling and administrative 10 Total variable cost per unit $160 Fixed costs: $700,000 Fixed manufacturing overhead 285,000 Fixed selling and administrative Total fixed costs $985,000