Reference no: EM132767497

Adam Grills, Inc., makes a single product-a handmade specialty barbecue grill that it sells for $210. Data for 2019 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

Fixed costs:

Fixed manufacturing overhead . . . . . . . . . . . . . . . . . . . $700,000
Fixed selling and administrative . . . . . . . . . . . . . . . . . . 285,000

Required:

Problem 1: Compute the unit product cost for one barbecue grill in both variable and absorption costing methods.

Problem 2: What is the company's break-even point in terms of the number of barbecue grills sold?