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 $850. Selected data for the company’s operations last year follow:

Units in beginning inventory		0
Units produced		250
Units sold		225
Units in ending inventory		25
Variable costs per unit:
Direct materials	$	100
Direct labor	$	320
Variable manufacturing overhead	$	40
Variable selling and administrative	$	20
Fixed costs:
Fixed manufacturing overhead	$	60,000
Fixed selling and administrative	$	20,000

Required:

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

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

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.