Ida Sidha Karya Company is a family-owned company located in thevillage of Glanyar on the island of Bali in Indonesia. The companyproduces a handcrafted Balinese musical instrument called a gamelanthat is similar to a xylophone. The gamelans are sold for $990.Selected data for the company’s operations last year follow: Unitsin beginning inventory 0 Units produced 240 Units sold 225 Units inending inventory 15 Variable costs per unit: Direct materials $ 120Direct labor $ 330 Variable manufacturing overhead $ 50 Variableselling and administrative $ 25 Fixed costs: Fixed manufacturingoverhead $ 72,000 Fixed selling and administrative $ 27,000 Theabsorption costing income statement prepared by the company’saccountant for last year appears below: Sales $ 222,750 Cost ofgoods sold 180,000 Gross margin 42,750 Selling and administrativeexpense 32,625 Net operating income $ 10,125 Required: 1. Determinehow much of the ending inventory consists of fixed manufacturingoverhead cost deferred in inventory to the next period. 2. Preparean income statement for the year using variable costing.
