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 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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