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Chuck Wagon Grills, Incorporated, 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
26,000
Units sold
22,000
Units in ending inventory
4,000
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
$ 910,000
Fixed selling and administrative
330,000
Total fixed costs
$ 1,240,000
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?
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