Variable and Absorption Costing Unit Product Costs LO 4–1 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 .

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.