Id3 S dha Karya Company is a famity-ownad company located in the vllage or Glany

Question

Id3 S dha Karya Company is a famity-ownad company located in the vllage or Glanyar on the Island of Bal in Indonesia. Tha company produces a handcrafted Ballnese musical Instrument called a gamelan that is similar to a xyiophone. The gamelans are sold for S860. Selacted data for the company's operations last year folow Unice in beginning ventory Units producad Unie sold Units in cncing imentory Variable costs per unt 320 285 Direct materia's S 135 5 355 15 S 64 000 Veriable manufacturing uverhead arlaa saling and Fixed cosls Flxad manufachuring aarhaad Fixed seling nd durinilualire The absorption costing income statemont propared by the company's accountant for last ycar appoars bolow: 245,100 205.200 9,900 Cozt of goads sold Gross margin Selling and administrave expense Nel upersing incume $ 625 Required 1. Under absorption costing, how much nxod manufecturing overhcad cost is included in the company's Inventory ar the ond of last ycar? 2rcparc an income statemonttor last year using vanable cost ng. Camplete this question by enterin g your answers in the tabs below. Require Reuired 2 Under absorption costing, how much tixed manutacturing overhead cost is included in the company's inventory at the end o last year? d n Required 2>

Explanation / Answer

1) Fixed manufacturing overhead cost included in inventory :

Fixed manufacturing overhead cost per unit = 64000/320 = 200 per unit

Fixed manufacturing overhead cost included in inventory = (200*35) = 7000

2) Prepare income statement under variable costing ;

Sales 245100 Less: Variable cost of goods sold (285*520) (148200) Gross contribution margin 96900 Less: Variable selling and administrative exp (285*15) (4275) Net contribution margin 92625 Less: Fixed expenses Manufacturing overhead (64000) Selling and administrative expenses (27000) (91000) Net operating income 1625

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