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 0Units produced 20,000Units sold 19,000Units in ending inventory 1,000Variable costs per unit: Direct materials$50Direct labor 80Variable manufacturing overhead 20Variable selling and administrative 10Total variable cost per unit$160Fixed costs: Fixed manufacturing overhead$700,000Fixed selling and administrative 285,000Total fixed costs$985,000 Required:1. Assume that the company uses absorption costing. Compute the unit product cost for one barbecue grill.2. Assume that the company uses absorption costing. Prepare an income statement for last year.

Fixed manufacturing overhead rate per unit = Total Fixed manufacturing overhead / Units produced =…

Answered: Chuck Wagon Grills, Inc., makes a…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...

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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 absorption costing. Compute the unit product cost for one barbecue grill.

2. Assume that the company uses absorption costing. Prepare an income statement for last year.

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