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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 sounding bars are cast from brass and hand-filed to attain just the right sound. The bars are then mounted on an intricately hand-carved wooden base. The gamelans are sold for 850 (thousand) rupiahs. (The currency in Indonesia is the rupiah, which is denoted by Rp.) Selected data for the company's operations last year follow (all currency values are in thousands of rupiahs):

Units in beginning inventory

0

Units produced

250

Units sold

225

Units in ending inventory

25

Variable costs per unit:

Direct materials

Rp 100

Direct labour

320

Variable manufacturing overhead

40

Variable selling and administrative

20

Fixed costs:

Fixed manufacturing overhead

Rp 60,000

Fixed selling and administrative

20,000

Required:

1.

Under absorption costing, all manufacturing costs (variable and fixed) are included in product costs. (Enter your answer in thousands of rupiahs.)

Direct materials

Rp

Direct labour

Variable manufacturing overhead

Fixed manufacturing overhead (Rp60,000 250 units)

Unit product cost

Rp

2.

Under variable costing, only the variable manufacturing costs are included in product costs. (Enter your answer in thousands of rupiahs.)

Direct materials

Rp

Direct labour

Variable manufacturing overhead

Unit product cost

Rp

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 sounding bars are cast from brass and hand-filed to attain just the right sound. The bars are then mounted on an intricately hand-carved wooden base. The gamelans are sold for 850 (thousand) rupiahs. (The currency in Indonesia is the rupiah, which is denoted by Rp.) Selected data for the company's operations last year follow (all currency values are in thousands of rupiahs):

Units in beginning inventory

0

Units produced

250

Units sold

225

Units in ending inventory

25

Variable costs per unit:

Direct materials

Rp 100

Direct labour

320

Variable manufacturing overhead

40

Variable selling and administrative

20

Fixed costs:

Fixed manufacturing overhead

Rp 60,000

Fixed selling and administrative

20,000

Statement of profit or lossprepared under the absorption costing method by the company's accountant appears below (all currency values are in thousands of rupiahs):

Sales (225 units Rp850)

Rp 191,250

Less cost of goods sold:

Beginning inventory

Rp 0

Add cost of goods manufactured (250 units Rp ?)

175,000

Goods available for sale

175,000

Less ending inventory (25 units Rp ?)

17,500

157,500

Gross margin

33,750

Less selling and administrative expenses:

Variable selling and administrative

4,500

Fixed selling and administrative

20,000

24,500

Profit

Rp 9,250

Required:

1.

Determine how much of the ending inventory of Rp17,500 above consists of fixed manufacturing overhead cost deferred in inventory to the next period. (Enter your answer in thousands of rupiahs.)

Fixed manufacturing overhead cost deferred in inventory to the next period

Rp

2.

(a)

Prepare a statement of profit or loss for the year using the variable costing method. (Enter your answers in thousands of rupiahs. If no entry is required, please, enter "0". Enter all answers as positive values.)

Sales

Rp

Less variable expenses:

Variable cost of goods sold:

Beginning inventory

Rp

Add variable manufacturing costs

Rp

Goods available for sale

Rp

Less ending inventory

Rp

Variable cost of goods sold

Rp

Variable selling and administrative expenses

Rp

Rp

Contribution margin

Rp

Less fixed expenses:

Fixed manufacturing overhead

Rp

Fixed selling and administrative expenses

Rp

Rp

Net profit

Rp

(b)

The difference in net profit between variable and absorption costing can be explained by:

the deferral of fixed manufacturing overhead cost in inventory under variable costing.

the deferral of variable manufacturing overhead cost in inventory under absorption costing.

the deferral of fixed manufacturing overhead cost in inventory under absorption costing.

the deferral of variable manufacturing overhead cost in inventory under variable costing.

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