Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $840. Selected data for the companys operations last year follow:

Units in beginning inventory	0
Units produced	300
Units sold	275
Units in ending inventory	25
Variable costs per unit:
Direct materials	$ 100
Direct labor	$ 310
Variable manufacturing overhead	$ 30
Variable selling and administrative	$ 35
Fixed costs:
Fixed manufacturing overhead	$ 66,000
Fixed selling and administrative	$ 31,000

The absorption costing income statement prepared by the companys accountant for last year appears below:

Sales	$ 231,000
Cost of goods sold	181,500
Gross margin	49,500
Selling and administrative expense	40,625
Net operating income	$ 8,875

Required:

1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year?

2. Prepare an income statement for last year using variable costing.

Answer is not complete.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

Prepare an income statement for last year using variable costing.

Ida Company
Variable Costing Income Statement
Salesselected answer correct		$231,000selected answer correct
Variable expenses:selected answer correct
Variable cost of goods soldselected answer correct	$121,000selected answer correct
Variable selling and administrative expenseselected answer correct	9,625selected answer correct
not attempted	not attempted
not attempted	not attempted	130,625
not attempted		100,375
not attempted
Fixed manufacturing overheadselected answer correct	66,000selected answer correct
Fixed selling and administrative expenseselected answer correct	31,000selected answer correct
not attempted	not attempted
not attempted	not attempted	97,000
not attempted		$3,375