Determine how much of the ending inventory consists of fixed manufacturing
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 $850. Selected data for the company?s operations last year follow:
Units in beginning inventory.... 0
Units produced....................... 250
Units sold............................... 225
Units in ending inventory....... 25
Variable costs per unit:
Direct Materials.................... $100
Direct Labor......................... $320
Variable Manufacturing overhead $ 40
Variable selling & administrative $ 20
Fixed Costs:
Fixed Manufacturing Overhead... $60,000
Fixed selling & administrative..... $20,000
Refer to the data in Exercise 6?1 for Ida Sidha Karya Company. The absorption costing income statement prepared by the company?s accountant for last year appears below:
Sales:................... $191,250
Cost of Goods Sold: $157,500
Gross Margin:.......... $ 33,750
Selling & Admin expense $24,500
Net Operating Income.... $ 9,250
Required:
Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.
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Prepare an income statement for the year using variable costing. Explain the difference in net operating income between the two costing methods.
Answers
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Posted 10 Jun 2017 07:06 AM
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