Ida Company produces a handcrafted 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. Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative 250 225 25 $ 100 $ 320 $ 40 $ 20 $ 60,000 $ 20,000 The absorption costing Income statement prepared by the company's accountant for last year appears below. Sales $ 191,250 Cost of goods sold 157,500 Gross margin 33,750 Selling and administrative expense 24,500 $ 9,250 Net operating income 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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for last year using variable costing. Ida Company Variable Costing Income Statement Sales $ 191,250 Variable expenses: Variable cost of goods sold $ 103,500 Variable selling and administrative expense Variable cost of goods sold x $ 4,500 47,250 x $ 20,000 x 175,250 Contribution margin 16,000 Fixed expenses: Fixed manufacturing overhead 60,000 Fixed selling and administrative expense 20,000 ✔ Net operating income 80,000 $ (84,000)
Ida Company produces a handcrafted 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. Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative 250 225 25 $ 100 $ 320 $ 40 $ 20 $ 60,000 $ 20,000 The absorption costing Income statement prepared by the company's accountant for last year appears below. Sales $ 191,250 Cost of goods sold 157,500 Gross margin 33,750 Selling and administrative expense 24,500 $ 9,250 Net operating income 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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for last year using variable costing. Ida Company Variable Costing Income Statement Sales $ 191,250 Variable expenses: Variable cost of goods sold $ 103,500 Variable selling and administrative expense Variable cost of goods sold x $ 4,500 47,250 x $ 20,000 x 175,250 Contribution margin 16,000 Fixed expenses: Fixed manufacturing overhead 60,000 Fixed selling and administrative expense 20,000 ✔ Net operating income 80,000 $ (84,000)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Ida Company produces a handcrafted 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.
Units in beginning inventory
Units produced
Units sold
Units in ending inventory
Variable costs per unit:
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Fixed costs:
Fixed manufacturing overhead
Fixed selling and administrative
250
225
25
$ 100
$
320
$ 40
$ 20
$ 60,000
$ 20,000
The absorption costing Income statement prepared by the company's accountant for last year appears below.
Sales
$ 191,250
Cost of goods sold
157,500
Gross margin
33,750
Selling and administrative expense
24,500
$ 9,250
Net operating income
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.
Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare an income statement for last year using variable costing.
Ida Company
Variable Costing Income Statement
Sales
$ 191,250
Variable expenses:
Variable cost of goods sold
$
103,500
Variable selling and administrative expense
Variable cost of goods sold
x $
4,500
47,250 x
$
20,000 x
175,250
Contribution margin
16,000
Fixed expenses:
Fixed manufacturing overhead
60,000
Fixed selling and administrative expense
20,000 ✔
Net operating income
80,000
$ (84,000)
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