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Item2

Item 2 2.3 points

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 gamelans are sold for $970. Selected data for the companys operations last year follow:

Units in beginning inventory		0
Units produced		200
Units sold		180
Units in ending inventory		20
Variable costs per unit:
Direct materials	$	130
Direct labor	$	300
Variable manufacturing overhead	$	30
Variable selling and administrative	$	15
Fixed costs:
Fixed manufacturing overhead	$	63,000
Fixed selling and administrative	$	25,000

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

Sales	$	174,600
Cost of goods sold		139,500
Gross margin		35,100
Selling and administrative expense		27,700
Net operating income	$	7,400

Required:

Prepare an income statement for last year using variable costing.