Ida Sidha Karya Company is a family-owned company located in the village of Gian

Question

Ida Sidha Karya Company is a family-owned company located in the village of Gianyar 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 $890. Selected data for the company's operations last year follow: Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unt 14,000 11,000 3,000 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 220 $ 450 $ 54 $ 22 Fixed costs Fixed manufacturing overhead Fixed selling and administrative S 790,000 720,000 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 nearest whole dollars.) roduct cost 2. Assume that the company uses variable costing. Compute the unit product cost for one gamelan. roduct cost

Explanation / Answer

1) Calculate unit product cost under absorption costing :

2) Calculate unit product cost under Variable costing :

Direct material 220 Direct labour 450 Variable manufacturing overhead 54 Fixed manufacturing overhead (790000/14000) 56 Unit product cost 780

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