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 $1,026. Selected data for the company’s operations last year follow: Units in beginning inventory 0 Units produced 10,000 Units sold 8,000 Units in ending inventory 2,000 Variable costs per unit: Direct materials $ 270 Direct labor $ 510 Variable manufacturing overhead $ 50 Variable selling and administrative $ 17 Fixed costs: Fixed manufacturing overhead $ 760,000 Fixed selling and administrative $ 410,000 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.

Explanation / Answer

1.unit product cost using absorption costing:

2. assuming the company uses variable overhead:

direct material $270 direct labour $510 variable manufacturing overhead $50 fixed manufacturing overhead ($760,000 / 10,000 units produced) $76 cost per unit $906

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