Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a...
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Accounting
Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $880. Selected data for the companys operations last year follow:
Units in beginning inventory
0
Units produced
280
Units sold
255
Units in ending inventory
25
Variable costs per unit:
Direct materials
$ 105
Direct labor
$ 315
Variable manufacturing overhead
$ 35
Variable selling and administrative
$ 40
Fixed costs:
Fixed manufacturing overhead
$ 63,000
Fixed selling and administrative
$ 32,000
The absorption costing income statement prepared by the companys accountant for last year appears below:
Sales
$ 224,400
Cost of goods sold
173,400
Gross margin
51,000
Selling and administrative expense
42,200
Net operating income
$ 8,800
Required:
1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year
Fixed manufacturing overhead cost included in inventory = ???
2. Prepare an income statement for last year using variable costing.
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