2

Local manufacturer produces a handcrafted musical instrument called dombyra. The dombyras 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 $20,000

Assume that the company uses variable costing. Compute the unit product cost for one dombyra. Show your workings.