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 $855. 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 $855. Selected data for the company’s operations last year follow:

Explanation / Answer

Fixed manufacturing overhead per unit = total overhead / no of units

= 820,000/ 20,000 = 41$

Selling and administrative expenses (both variable and fixed) are not considered for the computation of unit product cost. They are not direct costs.

Absorption costing Variable costing Direct Materials 260 260 Direct labor 350 350 Variable manufacturing overhead 64 64 Fixed maufacturing overhead 41 - unit cost production 715 674

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