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 sounding bars are cast from brass and hand-filed to attain just the right sound. The bars are then mounted on an intricately hand-carved wooden base. The gamelans are sold for 850 rupiahs.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 Rp100
- Direct labor Rp320
- Variable manufacturing overhead Rp40
- Variable selling and administrative Rp20
- Fixed costs:
- Fixed manufacturing overhead Rp60,000
Fixed selling and administrative Rp20,000
The absorption costing income statement prepared by the company's accountant for last year appears below:
- Sales Rp191,250
- Cost of goods sold 157,500
- Gross margin 33,750
- Selling and administrative expenses 24,500
- Net operating income Rp9,250
Requirement 1: Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.
Requirement 2: Prepare an income statement for the year using the variable costing method.