Check my work Ida Sidha Karya Company is a family-owned company located in the v
ID: 2601621 • Letter: C
Question
Check my work 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 $873 Selected data for the company's operations last year follow: Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: 13,000 9,000 4,000 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative 200 450 53 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $910,000 $450,000 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 1. Absorption costing unit product cost 2. Variable costing unit product costExplanation / Answer
Computation of Unit Product Cost Absorption Costing Variable Costing Direct Meterial $ 200 $ 200 Direct Labour $ 450 $ 450 Variable Manufactoring Overhead $ 53 $ 53 Fixed Manufactoring Overhead ($910,000 / 13,000) $ 70 Unit Product Cost $ 773 $ 703 Notice that the fixed manufacturing overhead cost has not been included while computing the cost of one unit under variable costing system. Selling and administrative expenses (both variable and fixed) are not relevant for the computation of unit product cost.