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 $980 Selected data for the company's operations last year follow: Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: 280 265 15 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 150 $370 45 30 Fixed costs: Fixed manufacturing overheadd Fixed selling and administrative $ 70,000 $ 30,000 The absorption costing income statement prepared by the company's accountant for last year appears below: Sales Cost of goods sold Gross margin Selling and administrative expense Net operating income $ 259,700 215,975 43,725 37,950 $5,775

Explanation / Answer

Fixed manufacturing overhead in inventory = 70000/280*15= $3750 Sales 259700 Variable expenses: Variable cost of goods sold 149725 Variable selling and administrative expenses 7950 Total Variable expenses 157675 Contribution margin 102025 Fixed expenses: Fixed manufacturing overhead 70000 Fixed selling and administrative expenses 30000 Total Fixed expenses 100000 Net operatimg income(loss) $2,025

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