Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Inferring Costing Method; Unit Product Cost Sierra Company incurs the following costs to produce and sell its only product. Variable costs per unit: $10 $5

image text in transcribed

Inferring Costing Method; Unit Product Cost Sierra Company incurs the following costs to produce and sell its only product. Variable costs per unit: $10 $5 Variable selling and administrative expenses Fixed costs per year Fixed selling and administrative expenses . . . . . . . . . . . . $400,000 During this year, 25,000 units were produced and 22,000 units were sold. The Finished Goods inventory account at the end of this year shows a balance of $72,000 for the 3,000 unsold units Requirea: 1. Calculate this year's ending balance in Finished Goods inventory two ways-using variable costing and using absorption costing. Does it appear that the company is using variable costing or absorption costing to assign costs to the 3,000 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 $72,000 the correct amount to include on the balance sheet for external reporting purposes? Explain b. What balance should be reported in the Finished Goods inventory account for external reporting purposes

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Assurance Services

Authors: William MessierSteven Glover

7th Edition

0073527084, 9780073527086

More Books

Students also viewed these Accounting questions

Question

=+1. What is a stakeholder? Define the term in your own words.

Answered: 1 week ago