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 $902. Selected data for the company's operations last year follow:
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Units in beginning inventory
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0
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Units produced
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15,000
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Units sold
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13,000
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Units in ending inventory
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2,000
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Variable costs per unit:
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Direct materials
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$ 280
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Direct labor
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$ 390
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Variable manufacturing overhead
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$ 56
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Variable selling and administrative
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$ 23
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Fixed costs:
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Fixed manufacturing overhead
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$ 840,000
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Fixed selling and administrative
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$ 940,000
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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.