Ida Sidha Karya Company is a familyowned company located in

Ida Sidha Karya Company is a family-owned company located in the village of Glanyar on the island of Bali in Indonesia. The company produces a handcrafted Balinese 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:

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

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

Solution

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

Ending inventory consist fixed manufacturing overhead cost deferred = 60000/250*25 = $6000