Ida Sidha Karya Company is a famlly-owned company located In the village of Gian

Question

Ida Sidha Karya Company is a famlly-owned company located In the village of Gianyar on the Island of Ball In Indonesla. The company produces a handcrafted Balinese musical Instrument called a gamelan that Is simlar to a xylophone. The gamelans are sold for $990. 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: 248 225 15 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 128 330 58 25 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $ 72,8ee $ 27,8e8 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 $ 222,758 188,888 42,758 32,625 $ 1e,125 Requlrec 1. Under absorption costing, how much fixed manufacturing overhead cost is Included In the company's Inventory at the end of last year? 2. Prepare an income statement for last year using variable costing. Complete this question by entering your answers in the tabs below

Explanation / Answer

Fixed manufacturing overhead cost included in inventory = (72000/240*15) = 4500

2) Prepare income statement under variable costing :

Sales 222750 Less: Variable cost Direct material (225*120) (27000) Direct labour (225*330) (74250) Variable manufacturing overhead (225*50) (11250) Variable selling and administrative expense (225*25) (5625) Total variable cost (118125) Contribution margin 104625 Less Fixed cost Fixed manufacturing cost (72000) Fixed selling and administrative expense (27000) Total fixed cost (99000) Net operating income 5625

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