Shastri Bicycle of Bombay, India, produces an inexpensive, yet rugged, bicycle f

Question

Shastri Bicycle of Bombay, India, produces an inexpensive, yet rugged, bicycle for use on the city’s crowded streets that it sells for 907 rupees. (Indian currency is denominated in rupees, denoted by R.) Selected data for the company’s operations last year follow:

Assume that the company uses absorption costing. Compute the unit product cost for one bicycle.(Round your intermediate and final answers to the nearest whole number.)

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

Shastri Bicycle of Bombay, India, produces an inexpensive, yet rugged, bicycle for use on the city’s crowded streets that it sells for 907 rupees. (Indian currency is denominated in rupees, denoted by R.) Selected data for the company’s operations last year follow:

Explanation / Answer

Shastri Bicycle of Bombay

Particulars::::::::::::::::::::::::::::::::::Absorption costing

Direct materials:::::::::::::::::::::::::::::::170 Rupees

Direct labor::::::::::::::::::::::::::::::::::::::::510 Rupees

Variable manufacturing overhead::::::::63 Rupees

Fixed manufacturing overhead:::::::::::::43.50 Rupees

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Unit produced Cost::::::::::::::::::::::::::786.50 Rupees

Fixed manufacturing overhead Calculation:870,000 /20,000

=43.50 Rupees

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2)Particulars::::::::::::::::::::::::::::::::::Variable costing

Direct materials:::::::::::::::::::::::::::::::170 Rupees

Direct labor::::::::::::::::::::::::::::::::::::::::510 Rupees

Variable manufacturing overhead::::::::63 Rupees

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Unit product cost:::::::::::::::::::::::::::::::::743 Rupees

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