Question
Ida Sidha Karya Company is a family-owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces a
Ida Sidha Karya Company is a family-owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $910. Selected data for the companys operations last year follow: |
Units in beginning inventory | 0 | |
Units produced | 310 | |
Units sold | 280 | |
Units in ending inventory | 30 | |
Variable costs per unit: | ||
Direct materials | $ | 130 |
Direct labor | $ | 350 |
Variable manufacturing overhead | $ | 50 |
Variable selling and administrative | $ | 40 |
Fixed costs: | ||
Fixed manufacturing overhead | $ | 62,000 |
Fixed selling and administrative | $ | 26,000 |
The absorption costing income statement prepared by the companys accountant for last year appears below: |
Sales | $ | 254,800 |
Cost of goods sold | 204,400 | |
Gross margin | 50,400 | |
Selling and administrative expense | 37,200 | |
Net operating income | $ | 13,200 |
Required: |
1. | Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period. |
2. | Prepare an income statement for the year using variable costing. |
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