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Amcor, Inc., produces and sells a single product. The following costs relate to its production and sale: Variable costs per unit Direct materials $ 10 Direct labor 5 Variable manufacturing overhead 2 Variable selling and administrative expenses 4 Fixed costs per year: Fixed manufacturing overhead $ 90,000 Fixed selling and administrative expenses 300,000 During the last year, 30,000 units were produced and 25,000 units were sold. The Finished Goods inventory account at the end of the year shows a balance of $85,000 for the 5,000 unsold units. Required: 1. Is the company using absorption costing or variable costing to cost units in the Finished Goods inventory account? Show computations to support your answer. ANSWER: The company is using costing 2. Assume that the company wishes to prepare financial statements for the year to issue to its stockholders. a Is the $85,000 figure for Finished Goods inventory the correct figure to use on these statements for external reporting purposes? Explain ANSWER: The $85,000 is the correct or incorrect amount. (circle correct or incorrect) Explain why the $85,000 is correct or incorrect. b. At what dollar amount should the 5,000 units be carried in inventory for external reporting purposes ANSWER: The inventory should be carried at go