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Ida Sidha Karya Company is a family-owned company located in thevillage of Gianyar on the island of Bali in Indonesia. The companyproduces a handcrafted Balinese musical instrument called a

Ida Sidha Karya Company is a family-owned company located in thevillage of Gianyar on the island of Bali in Indonesia. The companyproduces a handcrafted Balinese musical instrument called a gamelanthat is similar to a xylophone. The gamelans are sold for $950.Selected data for the company’s operations last year follow:

Units in beginning inventory 0

Units produced 250

Units sold 230

Units in ending inventory 20

Variable costs per unit:

Direct materials $ 125

Direct labor $ 335

Variable manufacturing overhead $ 55

Variable selling and administrative $ 30

Fixed costs:

Fixed manufacturing overhead $ 75,000

Fixed selling and administrative $ 15,000

The absorption costing income statement prepared by thecompany’s accountant for last year appears below:

Sales $ 218,500

Cost of goods sold 187,450

Gross margin 31,050

Selling and administrative expense 21,900

Net operating income $ 9,150

Required:

1. Determine how much of the ending inventory consists of fixedmanufacturing overhead cost deferred in inventory to the nextperiod.

2. Prepare an income statement for the year using variablecosting.

May 29 2021 View more View Less

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