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 $900. Selected data for the company's operations last year follow Units in beginning inventory Units produced Units solo Units in ending inventory Variable costs per unit: 0 300 275 25 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 125 $ 345 $45 $35 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $63,000 $25,000 The absorption costing income statement prepared by the company's accountant for last year appears below: Sales Cost of goods sold $ 247,500 199,375 Gross margin Selling and administrative expense 48,125 34,625 Net operating income $ 13,500

Explanation / Answer

1 Total fixed manufacturing overhead in ending inventory=63000/300*25= $5250 2 Sales 247500 Variable expenses: Variable cost of goods sold 141625 Variable selling and administrative expenses 9625 Total Variable expenses 151250 Contribution margin 96250 Fixed expenses: Fixed manufacturing overhead 63000 Fixed selling and administrative expenses 25000 Total Fixed expenses 88000 Net operating income(loss) 8250

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