Ida Company produces a handcrafted 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.
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