EXERCISE $6-2$ Variable Costing Income Statement; Explanation of Difference in Net Operating

Income $[$LO$6-2]$

Refer to the data in Exercise $6-1$ for Ida Sidha Karya Company. The absorption costing income statement

prepared by the company's accountant for last year appears below:

Required:

Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred

in inventory to the next period.

Prepare an income statement for the year using variable costing. Explain the difference in net operating

iEXERCISE $6-1$ Variable and Absorption Costing Unit Product Costs $[$LO$6-$I$]$

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 $$850.$ Selected data for the company's operations last

year follow:

Chapter $6$

Required:

Assume that the company uses absorption costing. Compute the unit product cost for one gamelan.

Assume that the company uses variable costing. Compute the unit product cost for one gamelan.ncome between the two costing methods.