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Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a...

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Accounting

Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $960. Selected data for the companys operations last year follow:

Units in beginning inventory

0

Units produced

230

Units sold

200

Units in ending inventory

30

Variable costs per unit:

Direct materials

$ 110

Direct labor

$ 320

Variable manufacturing overhead

$ 30

Variable selling and administrative

$ 10

Fixed costs:

Fixed manufacturing overhead

$ 69,000

Fixed selling and administrative

$ 27,000

The absorption costing income statement prepared by the companys accountant for last year appears below:

Sales

$ 192,000

Cost of goods sold

152,000

Gross margin

40,000

Selling and administrative expense

29,000

Net operating income

$ 11,000

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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Prepare an income statement for last year using variable costing

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