Variable Costing Unit Product Cost and Income Statement; Break-Even Analysis LO6–1, LO6–2 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:

Units in beginning inventory . . . . . . . . . . . . . . . . . . . . . . . . 0 Units produced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 Units sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000 Units in ending inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 Variable costs per unit:

Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50 Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Variable manufacturing overhead . . . . . . . . . . . . . . . . 20 Variable selling and administrative . . . . . . . . . . . . . . .    10 Total variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . $160 Fixed costs:

Fixed manufacturing overhead . . . . . . . . . . . . . . . . . . . $ 700,000 Fixed selling and administrative . . . . . . . . . . . . . . . . . . 285,000 Total fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 985,000 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?