Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone.Gamelans sell
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Question:
Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. Gamelans sell for $900. Below is selected data from the company's operations last year:
Units in beginning inventory | 0 | |
Units produced | 300 | |
Units sold | 275 | |
Units in ending inventory | 25 | |
Variable costs per unit: | ||
Direct materials | ps | 125 |
Direct labour | ps | 345 |
Variable manufacturing overhead | ps | 45 |
Variable and administrative sale. | ps | 35 |
Fixed costs: | ||
Fixed manufacturing costs | ps | 63.000 |
Fixed and administrative sale. | ps | 25.000 |
Below is the absorption costing income statement prepared by the company's accountant for last year:
Sales | ps | 247.500 |
Cost of goods sold | 199,375 | |
Gross margin | 48.125 | |
Sales and administration expenses | 34.625 | |
The operating margin | ps | 13.500 |
Required:
1. Under absorption costing, how much of the fixed manufacturing overhead costs is included in the company's inventory at the end of last year?
2. Prepare an income statement for last year using variable costing.
Related Book For
Managerial Accounting
ISBN: 9781260247787
17th Edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
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