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 10,100
Units sold 9,200
Units in ending inventory 900
Variable costs per unit
Direct materials $ 63
Direct labor 37
Variable manufacturing overhead 10
Variable selling and administrative 15
Total variable cost per unit $ 125
Fixed costs:
Fixed manufacturing overhead $ 303,000
Fixed selling and administrative 505,000
Total fixed costs $ 808,000
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.