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 Rp100 Direct labor Rp320 Variable manufacturing overhead Rp40 Variable selling and administrative Rp20 Fixed costs: Fixed manufacturing overhead Rp60,000 Fixed selling and administrative Rp20,000 ________________________________________ The absorption costing income statement prepared by the company's accountant for last year appears below (all currency values are in thousands of rupiahs): Sales Rp191,250 Cost of goods sold 157,500 Gross margin 33,750 Selling and administrative expenses 24,500 Net operating income Rp9,250 ________________________________________ Requirement 1: Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period. Requirement 2: Prepare an income statement for the year using the variable costing method. Explain the difference in net operating income between the two costing methods.