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 $896. Selected data for the company’s operations last year follow:

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.

Units in beginning inventory 0 Units produced 12,000 Units sold 9,000 Units in ending inventory 3,000 Variable costs per unit: Direct materials $ 270 Direct labor $ 370 Variable manufacturing overhead $ 63 Variable selling and administrative $ 17 Fixed costs: Fixed manufacturing overhead $ 880,000 Fixed selling and administrative $ 910,000

Explanation / Answer

1 Direct materials 270 Direct labor 370 Variable manufacturing overhead 63 Fixed manufacturing overhead 73 =880000/12000 Unit product cost 776 2 Direct materials 270 Direct labor 370 Variable manufacturing overhead 63 Unit product cost 703

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