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Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called

Ida Sidha Karya Company is a family-owned company located 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 250 Units sold 230 Units in ending inventory 20 Variable costs per unit: Direct materials $ 145 Direct labor $ 365 Variable manufacturing overhead $ 40 Variable selling and administrative $ 25 Fixed costs: Fixed manufacturing overhead $ 65,000 Fixed selling and administrative $ 29,000 The absorption costing income statement prepared by the companys accountant for last year appears below: Sales $ 227,700 Cost of goods sold 186,300 Gross margin 41,400 Selling and administrative expense 34,750 Net operating income $ 6,650 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an income statement for last year using variable costing. What is the amount of the difference in net operating income between the two costing methods? Ida Sidha Karya Company is a family-owned company located 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 250 Units sold 230 Units in ending inventory 20 Variable costs per unit: Direct materials $ 145 Direct labor $ 365 Variable manufacturing overhead $ 40 Variable selling and administrative $ 25 Fixed costs: Fixed manufacturing overhead $ 65,000 Fixed selling and administrative $ 29,000 The absorption costing income statement prepared by the companys accountant for last year appears below: Sales $ 227,700 Cost of goods sold 186,300 Gross margin 41,400 Selling and administrative expense 34,750 Net operating income $ 6,650 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an income statement for last year using variable costing. What is the amount of the difference in net operating income between the two costing methods?

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