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 for $950. Selected data for the company's operations last year follow: points (8 04:39:50 250 235 15 eBook Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative 135 345 30 20 Hint $ Print $ 65,000 $ 25,000 References The absorption costing income statement prepared by the company's accountant for last year appears below: Sales Cost of goods sold Gross margin Selling and administrative expense Net operating income $ 223,250 180,950 42,300 29,700 $ 12,600 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an income statement for last year using variable costing.

Answer 1

1 How much of the Ending inventory Consists of Fixed Manufacturing overehad cost Deferred = (Fixed MOH/Units Prodcued )* Ending units = (65000/250)*15 3,900 510 223250 2) Assuming the Firm Using the Variable Cositng Variable Costing Calculation of Unit cost Under Variable Costing Unit Product Cost (135+345+30) Variable Costing income Statement Sales (235*950) LESS: Variable Expense Variable Cost of Goods Sold (235*510) Variable Selling and Administrative Expense(235*20) Total Varible Expenses Total Contribution Margin Less:Fixed Expenses Fixed manufacturing Overheads Fixed Selling and Administrative Expenses Total fixed Expenses Net operating income (loss) 119850 4700 124550 98700 65000 25000 90000 8700