FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Ee.115.

 

Ida Company produces a handcrafted 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
Units produced
Units sold
Units in ending inventory
Variable costs per unit:
Direct materials.
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Fixed costs:
0
250
225
25
Sales.
Cost of goods sold
Gross margin
Selling and administrative expense
Net operating income
$100
$320
$ 40
$20
Fixed manufacturing overhead
Fixed selling and administrative
The absorption costing income statement prepared by the company's accountant for last year appears below:
$ 60,000
$ 20,000
$191,250
157,500
33,750
24,500
$ 9,250
Required:
1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last
year?
2. Prepare an income statement for last year using variable costing.
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Transcribed Image Text:Ida Company produces a handcrafted 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 Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials. Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs: 0 250 225 25 Sales. Cost of goods sold Gross margin Selling and administrative expense Net operating income $100 $320 $ 40 $20 Fixed manufacturing overhead Fixed selling and administrative The absorption costing income statement prepared by the company's accountant for last year appears below: $ 60,000 $ 20,000 $191,250 157,500 33,750 24,500 $ 9,250 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an income statement for last year using variable costing.
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