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 $870. Selected data for the companys operations last year follow:

Units in beginning inventory		0
Units produced		260
Units sold		230
Units in ending inventory		30
Variable costs per unit:
Direct materials	$	105
Direct labor	$	325
Variable manufacturing overhead	$	45
Variable selling and administrative	$	15
Fixed costs:
Fixed manufacturing overhead	$	65,000
Fixed selling and administrative	$	21,000

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

Sales	$	200,100
Cost of goods sold		166,750
Gross margin		33,350
Selling and administrative expense		24,450
Net operating income	$	8,900
1a. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? fixed manufacturing overhead cost included in inventory ________________ 1b. Prepare an income statement for last year using variable costing. 1c. What is the amount of the difference in net operating income between the two costing methods? amount of the4 difference in net operating income ________________

Variable Costing Income Statement