Shastri Bicycle of Bombay, India, produces an inexpensive, yet rugged, bicycle for use on the city’s crowded streets that it sells for 500 rupees

Shastri Bicycle of Bombay, India, produces an inexpensive, yet rugged, bicycle for use on the city’s crowded streets that it sells for 500 rupees. (Indian currency is denominated in rupees, denoted by .) Selected data for the company’s operations last year follow:









Units in beginning inventory



0

Units produced



10,000

Units sold



8,000

Units in ending inventory



2,000

Variable costs per unit:





Direct materials



120

Direct labor



140

Variable manufacturing overhead



50

Variable selling and administrative



20

Fixed costs:





Fixed manufacturing overhead



600,000

Fixed selling and administrative



400,000



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









Sales



4,000,000

Cost of goods sold



2,960,000



Gross margin



1,040,000

Selling and administrative expense



560,000



Net operating income



480,000



Required:



1.

Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period. (Omit the \"\" sign in your response.)

2.

Prepare an income statement for the year using variable costing. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the \"\" sign in your response.)


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