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 $850. Selected data for the company’s operations last year follow:

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 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 $850. Selected data for the company’s operations last year follow:

Explanation / Answer

Solution 1:

Fixed manufacturing overhead charged to production = $60,000

Number of unit produced = 250 units

Fixed manufacturing overhead per unit = $60,000/250 = $240 per unit

Units in ending inventory = 25 units

ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period = 25*$240 = $6,000

Solution 2:

Variable Costing Income Statement - Ida Sidha Karya Company Particulars Per Unit Total Sales $850.00 $191,250.00 Variable Cost: Direct Material $100.00 $22,500.00 Direct Labor $320.00 $72,000.00 Variable manufacturing overhead $40.00 $9,000.00 Variable Selling and administrative expense $20.00 $4,500.00 Contribution $370.00 $83,250.00 Fixed Cost: Fixed Manufacturing Overhead $60,000.00 Fixed Selling and administrative expense $20,000.00 Net Operating Income $3,250.00

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