Question

Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $874. Selected data for the company's operations last year follow: 22,000 19,000 3,000 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $ 280 380 45 21 $860,000 $970,000 Required: 1. Assume that the company uses absorption costing. Compute the unit product cost for one gamelan. (Round your intermediate calculations and final answer to the nearest whole dollar amount.) 2. Assume that the company uses variable costing. Compute the unit product cost for one gamelan. 1. Absorption costing unit product cost 2. Variable costing unit product cost

Answer 1

Required 1 :
Direct materials cost per unit	280
Direct labor per unit	380
Variable manufacturing overhead per unit	45
Fixed manufacturing overhead per unit [ Fixed manufacturing overhead / Units produced = 860000 / 22000 ]	39
Absorption costing unit product cost	744
Required 2 :
Direct materials cost per unit	280
Direct labor per unit	380
Variable manufacturing overhead per unit	45
Variable costing unit product cost	705