Ida Sidha Karya Company is a family-owned company located in the village of Gianyar 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 $840. 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 | $ | 100 |
| Direct labor | $ | 310 |
| Variable manufacturing overhead | $ | 30 |
| Variable selling and administrative | $ | 35 |
| Fixed costs: | ||
| Fixed manufacturing overhead | $ | 66,000 |
| Fixed selling and administrative | $ | 31,000 |
The absorption costing income statement prepared by the company’s accountant for last year appears below: |
| Sales | $ | 231,000 |
| Cost of goods sold | 181,500 | |
| Gross margin | 49,500 | |
| Selling and administrative expense | 40,625 | |
| Net operating income | $ | 8,875 |
| Required: |
| 1. | Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.  Explanation: 1.
2.
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