Question 5: DDD Grills, Inc. makes a single product-a handmade specialty barbeque grill that sells for $350. Data for last year's operations follow;
Units in beginning inventory 0
Units produced 30,000
Units sold 25,000
Units in ending inventory 5,000
Variable costs per unit
Direct materials mce_markernbsp; 90
Direct labor 120
Variable manufacturing overhead 70
Variable selling and administrative 20
Total variable cost per unit $300
Fixed costs:
Fixed manufacturing overhead $900,000
Fixed selling and administrative 350,000
Total fixed costs $1,250,000
Required:
a) Compute the unit product cost for one barbeque grill for each of the costing methods described in Chapter 9.
b) Prepare an income statement for the year using the absorption approach.
c) Prepare an income statement for the year using the variable costing approach.