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Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $980. 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 0 280 265 15 Sales Cost of goods sold Gross margin Selling and administrative expense Net operating income $ 150 $ 370 $45 $ 30 $ 70,000 $ 30,000 The absorption costing income statement prepared by the company's accountant for last year appears below: $ 259,700 215,975 43,725 37,950 $ 5,775 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.

Ida Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $980. 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 0 280 265 15 Sales Cost of goods sold Gross margin Selling and administrative expense Net operating income $ 150 $ 370 $45 $ 30 $ 70,000 $ 30,000 The absorption costing income statement prepared by the company's accountant for last year appears below: $ 259,700 215,975 43,725 37,950 $ 5,775 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Drop down options: Fixed manufacturing overhead Fixed selling and administrative expense Sales Units in beginning inventory Units in ending inventory Units produced Units sold Variable cost of goods sold Variable selling and administrative expense
**Ida Company: An Overview of Gamelan Production and Financial Analysis** Ida Company specializes in crafting a musical instrument called a gamelan, akin to a xylophone, selling for $980 each. The following is an analysis of the company’s operations and financial performance for the previous year. **Operational Data:** - **Units in Beginning Inventory:** 0 - **Units Produced:** 280 - **Units Sold:** 265 - **Units in Ending Inventory:** 15 **Variable Costs per Unit:** - **Direct Materials:** $150 - **Direct Labor:** $370 - **Variable Manufacturing Overhead:** $45 - **Variable Selling and Administrative:** $30 **Fixed Costs:** - **Fixed Manufacturing Overhead:** $70,000 - **Fixed Selling and Administrative:** $30,000 **Absorption Costing Income Statement:** - **Sales:** $259,700 - **Cost of Goods Sold:** $215,975 - **Gross Margin:** $43,725 - **Selling and Administrative Expense:** $37,950 - **Net Operating Income:** $5,775 **Required Analysis:** 1. **Absorption Costing Inventory Analysis:** - Determine the fixed manufacturing overhead costs incorporated into the ending inventory at the close of the last year. 2. **Variable Costing Income Statement:** - Prepare an income statement reflecting last year’s financials using variable costing methods. The above data and analyses provide insights into the costing, pricing, and profit margins of the gamelan instruments, offering a foundation for future strategic decisions in manufacturing and sales.
Transcribed Image Text:**Ida Company: An Overview of Gamelan Production and Financial Analysis** Ida Company specializes in crafting a musical instrument called a gamelan, akin to a xylophone, selling for $980 each. The following is an analysis of the company’s operations and financial performance for the previous year. **Operational Data:** - **Units in Beginning Inventory:** 0 - **Units Produced:** 280 - **Units Sold:** 265 - **Units in Ending Inventory:** 15 **Variable Costs per Unit:** - **Direct Materials:** $150 - **Direct Labor:** $370 - **Variable Manufacturing Overhead:** $45 - **Variable Selling and Administrative:** $30 **Fixed Costs:** - **Fixed Manufacturing Overhead:** $70,000 - **Fixed Selling and Administrative:** $30,000 **Absorption Costing Income Statement:** - **Sales:** $259,700 - **Cost of Goods Sold:** $215,975 - **Gross Margin:** $43,725 - **Selling and Administrative Expense:** $37,950 - **Net Operating Income:** $5,775 **Required Analysis:** 1. **Absorption Costing Inventory Analysis:** - Determine the fixed manufacturing overhead costs incorporated into the ending inventory at the close of the last year. 2. **Variable Costing Income Statement:** - Prepare an income statement reflecting last year’s financials using variable costing methods. The above data and analyses provide insights into the costing, pricing, and profit margins of the gamelan instruments, offering a foundation for future strategic decisions in manufacturing and sales.
### Ida Company: Variable Costing Income Statement #### Sales - **Total Sales:** $259,700 #### Variable Expenses 1. **Variable Cost of Goods Sold:** $215,975 2. **Variable Selling and Administrative Expense:** $37,950 - **Total Variable Expenses:** (Sum of the above) #### Contribution Margin - **Total Contribution Margin:** $253,925 #### Fixed Expenses 1. **Fixed Manufacturing Overhead:** $70,000 2. **Fixed Selling and Administrative Expense:** $30,000 - **Total Fixed Expenses:** $100,000 #### Net Operating Income - **Net Operating Income:** $(94,225) **Notes:** - The contribution margin is calculated by subtracting total variable expenses from total sales. - Net operating income is calculated by subtracting total fixed expenses from the contribution margin. - Any figures with a red 'X' indicate where no response was expected in a cell or where a formula-based calculation is incorrect, with no points deducted. --- ### Explanation of Graphs or Diagrams This image includes a table layout with columns indicating figures of income and expenses, each marked with checkmarks or crosses to indicate accuracy or error in expected inputs or calculations. There are no graphical diagrams outside of tabular data.
Transcribed Image Text:### Ida Company: Variable Costing Income Statement #### Sales - **Total Sales:** $259,700 #### Variable Expenses 1. **Variable Cost of Goods Sold:** $215,975 2. **Variable Selling and Administrative Expense:** $37,950 - **Total Variable Expenses:** (Sum of the above) #### Contribution Margin - **Total Contribution Margin:** $253,925 #### Fixed Expenses 1. **Fixed Manufacturing Overhead:** $70,000 2. **Fixed Selling and Administrative Expense:** $30,000 - **Total Fixed Expenses:** $100,000 #### Net Operating Income - **Net Operating Income:** $(94,225) **Notes:** - The contribution margin is calculated by subtracting total variable expenses from total sales. - Net operating income is calculated by subtracting total fixed expenses from the contribution margin. - Any figures with a red 'X' indicate where no response was expected in a cell or where a formula-based calculation is incorrect, with no points deducted. --- ### Explanation of Graphs or Diagrams This image includes a table layout with columns indicating figures of income and expenses, each marked with checkmarks or crosses to indicate accuracy or error in expected inputs or calculations. There are no graphical diagrams outside of tabular data.
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