Ida Sidha Karya Company is a family-owned company located on theisland of Bali in Indonesia. The company produces a handcraftedBalinese musical instrument called a gamelan that is similar to axylophone. The gamelans are sold for $950. Selected data for thecompany’s operations last year follow:Units in beginning inventory0Units produced230Units sold200Units in ending inventory30Variable costs per unit: Direct materials110$Direct labor320$Variable manufacturing overhead30$Variable selling and administrative10$Fixed costs: Fixed manufacturing overhead69000$Fixed selling and administrative27000$The absorption costing income statement prepared by the company’saccountant for last year appears below:Sales192000$Costs of good sold152000Gross margin40000Selling and administrative expense29000Net operating income11000$ 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. What isthe amount of the difference in net operating income between the two costing methods?

Fixed manufacturing overhead cost included in inventory = (units in ending inventory * fixed…

Answered: Ida Sidha Karya Company is a…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 58P: Cost of Goods Manufactured, Income Statement W. W. Phillips Company produced 4,000 leather recliners...

See similar textbooks

Related questions

Question

Ida Sidha Karya Company is a family-owned company located 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:

Units in beginning inventory	0
Units produced	230
Units sold	200
Units in ending inventory	30
Variable costs per unit:
Direct materials	110$
Direct labor	320$
Variable manufacturing overhead	30$
Variable selling and administrative	10$
Fixed costs:
Fixed manufacturing overhead	69000$
Fixed selling and administrative	27000$

The absorption costing income statement prepared by the company’s

accountant for last year appears below:

Sales	192000$
Costs of good sold	152000
Gross margin	40000
Selling and administrative expense	29000
Net operating income	11000$

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. What is

the amount of the difference in net operating income between the two costing methods?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions