Ida Sidha Karya Company is a family-owned company located on the island of Ball in Indonesia....
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Ida Sidha Karya Company is a family-owned company located on the island of Ball in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $880. Selected data for the company's operations last year follow: Units in beginning inventory Unita produced Units sold Units in ending inventory Variable costs per units Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costa Fixed manufacturing overhead Fixed selling and administrative 0 280 255 25 $ 105 $ 315 $ 35 $ 40 $ 63,000 $ 32,000 The absorption costing income statement prepared by the company's accountant for last year appears below: Sales $224,400 Cost of goods sold 173,400 Gross margin 51,000 Selling and administrative expense 42,200 Net operating income 8,800 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 Ball in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $880. Selected data for the company's operations last year follow: Units in beginning inventory Unita produced Units sold Units in ending inventory Variable costs per units Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costa Fixed manufacturing overhead Fixed selling and administrative 0 280 255 25 $ 105 $ 315 $ 35 $ 40 $ 63,000 $ 32,000 The absorption costing income statement prepared by the company's accountant for last year appears below: Sales $224,400 Cost of goods sold 173,400 Gross margin 51,000 Selling and administrative expense 42,200 Net operating income 8,800 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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