Exercise 7-14 Variable Costing Unit Product Cost and Income Statement; Break-Even Analysis [LO7-1, LO7-2]

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.

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?