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 $840. Selected data for the company’s operations last year follow: Units in beginning inventory 0Units produced 300Units sold 275Units in ending inventory 25Variable costs per unit: Direct materials$100Direct labor$310Variable manufacturing overhead$30Variable selling and administrative$35Fixed costs: Fixed manufacturing overhead$ 66,000Fixed selling and administrative$ 31,000 The absorption costing income statement prepared by the company’s accountant for last year appears below: Sales$231,000Cost of goods sold 181,500Gross margin 49,500Selling and administrative expense 40,625Net operating income$8,875 Required:1. Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period. 2. Prepare an income statement for the year using variable costing.

The financial statement being prepared at the end of the financial year to determine the profits or…

Answered: Required: 1. Determine how much of the…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 2CE: Kaune Food Products Company manufactures canned mixed nuts with an average manufacturing cost of 52...

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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 $840. Selected data for the company’s operations last year follow:


Units in beginning inventory		0
Units produced		300
Units sold		275
Units in ending inventory		25
Variable costs per unit:
Direct materials	$	100
Direct labor	$	310
Variable manufacturing overhead	$	30
Variable selling and administrative	$	35
Fixed costs:
Fixed manufacturing overhead	$	66,000
Fixed selling and administrative	$	31,000

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


Sales	$	231,000
Cost of goods sold		181,500
Gross margin		49,500
Selling and administrative expense		40,625
Net operating income	$	8,875

Required:

1. Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.

2. Prepare an income statement for the year using variable costing.

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