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Ida Sidha Karya Company is a family-owned company located in the village of Gianyar on the...

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Accounting

Ida Sidha Karya Company is a family-owned company located in thevillage of Gianyar on the island of Bali in Indonesia. The companyproduces a handcrafted Balinese musical instrument called a gamelanthat is similar to a xylophone. The gamelans are sold for $900.Selected data for the company’s operations last year follow:

Units in beginning inventory      0
Units produced      300
Units sold      275
Units in ending inventory      25
Variable costs per unit:       
Direct materials   $   125
Direct labor   $   345
Variable manufacturing overhead   $   45
Variable selling and administrative   $  35
Fixed costs:        
Fixed manufacturing overhead   $   63,000
Fixed selling and administrative   $  25,000

The absorption costing income statement prepared by the company’saccountant for last year appears below:

Sales   $   247,500
Cost of goods sold      199,375
Gross margin      48,125
Selling and administrative expense     34,625
Net operating income   $   13,500

Required:
1. Under absorption costing, how much fixed manufacturing overheadcost is included in the company's inventory at the end of lastyear?
2. Prepare an income statement for last year using variablecosting.

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