Ida Sidha Karya Company is a family-owned company located in the village of Glanyar 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 $980. Selected data for the companys operations last year follow:

Units in beginning inventory		0
Units produced		240
Units sold		225
Units in ending inventory		15
Variable costs per unit:
Direct materials	$	140
Direct labor	$	360
Variable manufacturing overhead	$	35
Variable selling and administrative	$	20
Fixed costs:
Fixed manufacturing overhead	$	66,000
Fixed selling and administrative	$	28,000

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

Sales	$	220,500
Cost of goods sold		182,250
Gross margin		38,250
Selling and administrative expense		32,500
Net operating income	$	5,750

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.

lda Sidha Karya Company is a family-owned company located in the village of Glanyar 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 $980. Selected data for the company's operations last year follow: Units in beginning inventory Units produced 240 Units sold 225 15 Units in ending inventory Variable costs per unit: Direct materials 140 Direct labor 360 Variable manufacturing overhead 35 Variable selling and administrative 20 Fixed costs: 66,000 Fixed manufacturing overhead 28,000 Fixed selling and administrative The absorption costing income statement prepared by the company's accountant for last year appears below: 220,500 Sales Cost of goods sold 182,250 Gross margin 38,250 32,500 Selling and administrative expense 5,750 Net operating income