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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

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 $990. 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 $ 120
Direct labor $ 330
Variable manufacturing overhead $ 50
Variable selling and administrative $ 25
Fixed costs:
Fixed manufacturing overhead $ 72,000
Fixed selling and administrative $

27,000

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

Sales $ 222,750
Cost of goods sold 180,000
Gross margin 42,750
Selling and administrative expense 32,625
Net operating income $ 10,125
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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