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 $880. Selected data for the company's operations last year follow: 280 240 40 115 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative 335 A 35 25 $ 63,000 $ 23,000 The absorption costing income statement prepared by the company's accountant for last year appears below: Sales Cost of goods sold $ 211,200 170,400 Gross margin Selling and administrative expense 40,800 29,000 Net operating income $ 11,800 Required: 1. Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period. Total fixed manufacturing overhead in ending inventory

Explanation / Answer

1 Total fixed manufacturing overhead in ending inventory=63000/280*40= $9000 Sales 211200 Variable expenses: Variable cost of goods sold 116400 Variable selling and administrative expenses 6000 Total Variable expenses 122400 Contribution margin 88800 Fixed expenses: Fixed manufacturing overhead 63000 Fixed selling and administrative expenses 23000 Total Fixed expenses 86000 Net operatimg income(loss) 2800

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