According to the u. s. energy information administration, the average price of heating oil fell to under $3.00 a gallon during the winter of 2014-2015, the lowest price in more than four years. about 6.2 million u. s. households in the northeast rely on the fuel to heat their homes. for the following questions, assume that no factor that affects the demand for heating oil, other than its price, changed during the winter of 2014-2015. source: jon kamp, "cheaper hearing oil fuels billions in savings in northeast," wall street journal, january 16, 2015.

Exercise 6-2 variable costing income statement; explanation of difference in net operating income [lo6-2] ida sidha karya company is a family-owned company located 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 $970. selected data for the company’s operations last year follow: units in beginning inventory 0 units produced 200 units sold 180 units in ending inventory 20 variable costs per unit: direct materials $ 130 direct labor $ 300 variable manufacturing overhead $ 30 variable selling and administrative $ 15 fixed costs: fixed manufacturing overhead $ 63,000 fixed selling and administrative $ 25,000 the absorption costing income statement prepared by the company’s accountant for last year appears below: sales $ 174,600 cost of goods sold 139,500 gross margin 35,100 selling and administrative expense 27,700 net operating income $ 7,400 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.