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# Variable and Absorption Costing

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CompuDesk, Inc., makes an oak desk specially designed for personal computers. The desk sells for \$195. Data for last year's operations follow:

Units in beginning inventory 0
Units produced 9,900
Units sold 8,000
Units in ending inventory 1,900
Variable costs per unit:
Direct materials \$ 61
Direct labor 32
Total variable cost per unit \$ 126
Fixed costs
Total fixed costs \$ 830,000

Requirement 1:
Assume that the company uses variable costing. Compute the unit product cost for one computer desk.

Unit product cost = \$___________________

Requirement 2:
Assume that the company uses variable costing. Prepare a contribution format income statement for the year.
(Fill in grey area)
Sales \$
Variable expenses:
Variable Cost of goods sold:
Beginning inventory \$
Goods available for sale
Less: Ending inventory
Variable cost of goods sold
Contribution
Fixed expenses:
Net operating loss \$

Requirement 3:
What is the company's break-even point in terms of units sold?

Break-even point = _________________ units.