Ida Sidha Karya Company is a family-owned company located in the village of Gian

Question

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 $910. Selected data for the company’s operations last year follow:

26,000  

The absorption costing income statement prepared by the company’s accountant for last year appears below:

Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.

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 $910. Selected data for the company’s operations last year follow:

Explanation / Answer

1. Fixed manufacturing cost per unit = Total fixed manufacturing overheads / number of units produced

= 62000 / 310

= 200 per unit.

multiply with ending inventory to fixed manufacturing cost per unit

= 30 * 200 = 6000

2. Income Statement in variable costing

Sales [280 * 910 ] 254800

less: variable expenses:

Direct materials [280*130] (36400)

Direct labor [280*350] (98000)

Variable manufacturing expenses [ 280 * 50] (14000)

Variable selling & administrative expenses

[ 280 * 40 ] (11200)

Contribution 95200

less: Fixed expenses :

fixed manufacturing expenses (62000)

fixed selling&administrative expenses (26000)

   Net operating income 7200.

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