EXERCISE 6-1 Variable and Absorption Costing Unit Product Costs (L011

Shastri Bicycle of Bombay, India, produces an inexpensive, yet rugged, bicycle for use on the city's crowded streets that it sells for 500 rupees. (Indian currency is denominated in rupees, denoted by R.) Selected data for the company's operations last year follow:

Units in beginning inventory0 Units produced10,000 Units sold8,000 Units in ending inventory2,000 Variable costs per unit: Direct materialsR120 Direct laborR140 Variable manufacturing overheadR50 Variable selling and administrativeR20 Fixed costs: Fixed manufacturing overheadR600,000 Axed selling and administrative8400,000

Required:

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

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

EXERCISE 6-1 Variable and Absorption Costing Unit Product Costs [L01] Shastri Bicycle of Bombay, India, produces an inexpensive, yet rugged, bicycle for use on the city's crowded streets that it sells for 500 rupees. (lndian currency is denominated in rupees, denoted by R.) Selected data lor the company's operations last year follow: Ul'II I1 Dunning Imnbry ................. it Until produood ........................... 10.000 Lll'lI sold ............................... 3.000 Unila in ending Inventory .................... 2.000 W m per unit: Dina mahrialn ......................... F1120 Bind labor ............................ H149 W Wm mom ........... H50 W IIIII'Io Ind \"11an .......... H20 and m: Fixed mummy DIN-HIDE! ............. Honopoo Fixed soilru and ldmhblntiw ............ manna Required: 1. Assume that the company uses absorption costing. Compute the unit product cost for one bicycle. 2. Assume that the company uses variable costing. Compute the unit product cost for one bicycle