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 $844. Selected data for the company’s operations last year follow:

Assume that the company uses absorption costing. Compute the unit product cost for one gamelan.

Assume that the company uses variable costing. Compute the unit product cost for one gamelan.

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 $844. Selected data for the company’s operations last year follow:

Explanation / Answer

Answer:- 1-)-Unit fixed manufacturing overhead= fixed manufacturing overhead/No. of units produced

=$890000/20000 units =$44.50 per unit

Unit product cost under Absorption costing for on gamelan:-Direct materials + Direct Labor+Variable manufacturing overhead + fixed manufacturing overhead

=$180+$450+$49+$44.50 = $723.50 per unit

2-)-Unit product cost under variable costing for one gamelan:-Direct materials + Direct Labor+Variable manufacturing overhead

=$180+$450+$49 = $679 per unit

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