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 S920. 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: 275 260 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative S 110 S 320 S 40 Fixed costs Fixed manufacturing overhead Fixed selling and administrative S 77,000 S 33,000 The absorption costing income statement prepared by the company's accountant for last year appears below Sales Cost of goods sold S 239,20D 195,000 Gross margin Selling and administrative expense 44.200 36.900 Net operating income S 7,300 Required: 1. Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period S 4,200 2. Prepare an income statement for the year using variable costing Ida Sidha Karya Company Variable Costing Income Statement S 239,200 Variable expenses S 126,100 Variable cost of goods sold ariable selling and administrative expense 126,100 113,100 Fixed expenses Fixed manufacturing overhead Fixed selling and administrative 77,000 33,000 10,000 3,100

Explanation / Answer

1) Total fixed manufacturing overhead cost in ending inventory = (77000/275)*15 = 4200

2) Prepare contribution format income statement under variable costing :

Sales 239200 Variable expenses Variable cost of goods sold (260*470) (122200) Variable selling and administrative expenses (260*15) (3900) Total variable cost (126100) Contribution margin 113100 Fixed expenses: Fixed manufacturing overhead (77000) Fixed selling and administrative expenses (33000) Total fixed expenses (110000) Net operating income 3100

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.