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 $934. Selected data for the company’s operations last year follow: Units in beginning inventory 0 Units produced 12,000 Units sold 10,000 Units in ending inventory 2,000 Variable costs per unit: Direct materials $ 170 Direct labor $ 500 Variable manufacturing overhead $ 52 Variable selling and administrative $ 16 Fixed costs: Fixed manufacturing overhead $ 860,000 Fixed selling and administrative $ 990,000 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

Answer 1

1	Unit product cost for one gamelan under Absorption Costing
	Direct Material Cost		$ 170.00
	Direct Labour Cost		$ 500.00
	Variable Maufacturing Overhead		$    52.00
	Fixed Manufacturing overhead	990000/12000	$    71.67
	Unit Product Cost		$ 793.67
2	Unit product cost for one gamelan under Variable Costing
	Direct Material Cost		$ 170.00
	Direct Labour Cost		$ 500.00
	Variable Maufacturing Overhead		$    52.00
	Unit Product Cost		$ 722.00