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

Question

Ida Sidha Karya Company is a family-owned company located in the village of Glanyar 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 $950. Selected data for the company’s 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 $ 125 Direct labor $ 335 Variable manufacturing overhead $ 55 Variable selling and administrative $ 30 Fixed costs: Fixed manufacturing overhead $ 75,000 Fixed selling and administrative $ 15,000 The absorption costing income statement prepared by the company’s accountant for last year appears below: Sales $ 218,500 Cost of goods sold 187,450 Gross margin 31,050 Selling and administrative expense 21,900 Net operating income $ 9,150 Required: 1. Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.

Explanation / Answer

Fixed manufacturing overhead cost deferred in inventory = 75000/250*20= $6000

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