EXERCISE 6-1 Variable and Absorption Costing Unit Product Costs [L06-1] Ida Sidh

Question

EXERCISE 6-1 Variable and Absorption Costing Unit Product Costs [L06-1] Ida Sidha Ka island of Bali called a gamela the company's operations last year follow: rya Company is a family-owned company located in the village of Gianyar on the in Indonesia. The company produces a handcrafted Balinese musical instrument n that is similar to a xylophone. The gamelans are sold for $850. Selected data for 0 250 225 25 Variable costs per unit: $100 $320 $40 $20 Direct labor . Variable selling and administrative . . . . . . Fixed costs: Fixed selling and administrative . . . . $20,000

Explanation / Answer

Answer to Part 1.

Unit Product Cost as per Absorption Costing = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead

Fixed Manufacturing Overhead per unit = Fixed Manufacturing Overhead/ Units Produced

Fixed Manufacturing Overhead per unit = 60,000/250

Fixed Manufacturing Overhead per unit = $240

Unit Product Cost as per Absorption Costing = $100 + $320 + $40 + $240

Unit Product Cost as per Absorption Costing = $700

Answer to Part b

Unit Product Cost as per Variable Costing = Direct Materials + Direct Labor + Variable Manufacturing Overhead

Unit Product Cost as per Variable Costing = $100 + $320 + $40

Unit Product Cost as per Variable Costing = $460

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