Variable Costing Income Statement; Explanation of Difference in Net Operating Income Refer to the data in Exercise 7—1 for Ida Sidha Karya Company. The absorption costing income statement prepared by the company’s accountant for last year appears below (all currency values are in thousands of rupiahs):

Required:

1.         Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.

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

Transcribed Image Text:

Sales Rp191 250 Cost of goods sold 157,500 Gross margin 33,750 Selling and administrative expense 24,500 Rp 9,250 Net operating income