Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $950. Selected data for the companys operations last year follow:

Units in beginning inventory	0
Units produced	250
Units sold	235
Units in ending inventory	15
Variable costs per unit:
Direct materials	$135
Direct labor	$ 345
Variable manufacturing overhead	$ 30
Variable selling and administrative	$ 20
Fixed costs:
Fixed manufacturing overheads	$ 65,000
Fixed selling and administrative	$ 25,000

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

Sales	$ 223,250
Cost of goods sold	180,950
Gross margin	42,300
Selling and administrative expenses	29,700
Net operating income	$ 12,600

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.

Fixed manufacturing overhead cost included in the inventory

Ida Company
Variable Costing Income Statement

Net operating income