Exercise 5-1 Variable and Absorption Costing Unit Product Costs [LO5-1]

Shastri Bicycle of Bombay, India, produces an inexpensive, yet rugged, bicycle for use on the citys crowded streets that it sells for 859 rupees. (Indian currency is denominated in rupees, denoted by R.) Selected data for the companys operations last year follow:

Units in beginning inventory		0
Units produced		25,000
Units sold		22,000
Units in ending inventory		3,000
Variable costs per unit:
Direct materials		R 220
Direct labor		R 460
Variable manufacturing overhead		R 47
Variable selling and administrative		R 16
Fixed costs:
Fixed manufacturing overhead		R 800,000
Fixed selling and administrative		R 930,000

Required:

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