Ida Sidha Karya Company is a family-owned company located in the village of Gian

Question

Ida Sidha Karya Company is a family-owned company located in the village of Gianyar 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 tor $980. 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 280 265 15 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative S 150 $ 370 $45 $ 30 Fixed costs Fixed manufacturing overhead Fixed selling and administrative 70,000 S 30,000 The absorption costing income statement prepared by the company's accountant for last year appears below Sales Cost of goods sold $ 259,700 215,975 Gross margin Selling and administrative expense 43,725 37,950 Net operating income $ 5.775 Required 1. Determine how much of the ending inventory consists of fxed manufacturing overhead cost deferred in inventory to the next period 2. Prepare an income statement for the year using variable costing Ida Sidha Karya Company Variable Costing Income Statement Variable expenses: Fixed expenses

Explanation / Answer

fixed MOH overhead cost per unit = 70,000/280 250 Deferred = 250*15 3750 total fixed manufacturing overhead in ending inventory $3,750 Variable costing income statement sales 259,700 less:Variable expense Variable cost of goods sold (265*565) 149725 Variable selling & adm expense(265*30) 7950 157675 Contribution margin 102,025 Fixed expenses: fixed manufacturing overhead 70,000 fixed selling & adm expense 30,000 100,000 Net income 2,025 or if individual items are to be filled for variable expense then use this format Variable costing income statement sales 259,700 less:Variable expense Direct materials (265*150) 39750 direct labor (265*370 98050 Variable MOH (265*45( 11925 Variable selling & adm expense(265*30) 7950 157675 Contribution margin 102,025 Fixed expenses: fixed manufacturing overhead 70,000 fixed selling & adm expense 30,000 100,000 Net income 2,025

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