Exercise 6-14 Variable Costing Unit Product Cost and Income Statement; Break-Even Analysis [LO6-1, LO6-2]

Chuck Wagon Grills, Inc., makes a single producta handmade specialty barbecue grill that it sells for $200. Data for last years operations follow:

Units in beginning inventory		0
Units produced		9,800
Units sold		8,400
Units in ending inventory		1,400
Variable costs per unit:
Direct materials	$	60
Direct labor		20
Variable manufacturing overhead		10
Variable selling and administrative		30
Total variable cost per unit	$	120
Fixed costs:
Fixed manufacturing overhead	$	150,000
Fixed selling and administrative		490,000
Total fixed costs	$	640,000

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 companys break-even point in terms of the number of barbecue grills sold?