Exercise 7-13 Inferring Costing Method; Unit Product Cost [L07-1] Sierra Company incurs the following costs to produce and sell its only product. 9 Variable costs per unit: Direct materials Direct labor Variable nanufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ $ $ $ 121,000 $ 315,000 During this year, 30,250 units were produced and 25,250 units were sold. The Finished Goods inventory account at the end of this year shows a balance of $100,000 for the 5,000 unsold units Required: 1-a. Calculate this year's ending balance in Finished Goods inventory two ways-using variable costing and using absorption costing, 1-6. Does it appear that the company is using variable costing or absorption costing to assign costs to the 5,000 units in its Finished Goods Inventory? 2. Assume that the company wishes to prepare this year's financial statements for its stockholders. a. Is Finished Goods inventory of $100,000 the correct amount to include on the balance sheet for external reporting purposes? b. What balance should be reported in the Finished Goods inventory account for external reporting purposes? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2A Reg 28 Calculate this year's ending balance in Finished Goods inventory two ways-using variable costing and using absorption costing. (Round intermediate calculation to the nearest dollar amount.) Ending Balance in Finished Goods Variable costing Absorption costing Req18 > Complete this question by entering your answers in the tabs below. Req1A Reg 1B Reg 2A Reg 2B Does it appear that the company is using variable costing or absorption costing to assign costs to the 5,000 units in its Finished Goods inventory? Absorption costing Variable costing Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2A Reg 28 Assume that the company wishes to prepare this year's financial statements for its stockholders. Is Finished Goods inventory of $100,000 the correct amount to include on the balance sheet for external reporting purposes? Yes, because variable costing is generally accepted for external reporting. No, because variable costing is not generally accepted for external reporting. Yes, because absorption costing is generally accepted for external reporting. No, because absorption costing is not generally accepted for external reporting, Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req ZA Reg 28 Assume that the company wishes to prepare this year's financial statements for its stockholders. What balance should be reported in the Finished Goods inventory account for external reporting purposes? Finished goods inventory balance for external reporting purposes
