Ida Sidha Karya Company is a family-owned company located in the village of Gian

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 $910. Selected data for the company's operations last year follow: Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit 300 265 35 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $115 $325 $ 45 $20 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $72,000 $34,000 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 S 241,150 192.125 49,025 39,300 9,725 Required 1. Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period. S 8,400

Explanation / Answer

Ans.1 The ending inventory consists of the fixed manufacturing overhead cost deferred in inventory to the next period

Units in Ending Inventory = 35 units

fixed Manufacturing Overhead/Unit = 240 (72,000 / 300 units)

Fixed Manufacturing Overhead Cost deferred = $8,400 (35 x 240)

Ans. 2

Note :- Variable Cost of goods sold per units

Direct Materials = $115

Direct Labor = $325

Variable manufacturing overhead = $45

Total Variable Cost of Goods sold per units = $485

IDA SIDHA KARYA COMPANY

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