CompuDesk, Inc., makes an oak desk specially designed for personal computers. The desk sells for $200. Data for last year’s operations follow:

Units in beginning inventory . . . . . . . . . . . . . . . . . . 0

Units produced. . . . . . . . . . . . . . . . . . . . . . . . . 10,000

Units sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000

Units in ending inventory . . . . . . . . . . . . . . . . . . 1,000

Variable costs per unit:

Direct materials . . . . . . . . . . . . . . . . . . . . . . . . $ 60

Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Variable manufacturing overhead . . . . . . . . . . . . 10

Variable selling and administrative . . . . . . . . . . . 20

Total variable cost per unit . . . . . . . . . . . . . . . . $ 120

Fixed costs003A

Fixed manufacturing overhead . . . . . . . . . . . $300,000

Fixed selling and administrative . . . . . . . . . . 450,000

Total fixed costs . . . . . . . . . . . . . . . . . . . . . . $750,000

Required:

1. Assume that the company uses variable costing. Compute the unit product cost for one computer desk.

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 units sold?