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 $843. Selected data for the company's operations last year follow: 16,000 13,000 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 160 440 49 20 $ 870,000 $ 820,000 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

1) Unit product cost : Absorption Costing

Direct material	160
Direct labor	440
Variable manufacturing overhead	49
Fixed manufacturing overhead (870000/16000)	54
Unit product cost	703

2) Unit product cost : Variable Costing

Direct material	160
Direct labor	440
Variable manufacturing overhead	49
Unit product cost	649