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

Chuck Wagon Grills, Inc., makes a single producta handmade specialty barbecue grill that it sells for $210. Data for last years 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.

What is the unit product cost ______

2. Assume that the company uses variable costing. Prepare a contribution format income statement for the year.

Chuck Wagon Grills, Inc

Variable Costing Income Statement

Variable Expenses:
Fixed expenses

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

What is the brea-even point _____________units