Sierra Company incurs the following costs to produce and sell a single product Variable costs per unit: Direct materials 12 Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year 4 114,000 285,000 Fixed selling and administrative expenses the end of the year shows a balance of $60,500 for the 2,750 unsold units. During the last year, 28,500 units were produced and 25,750 units were sold. The Finished Goods inventory account Re omine whether the company is using absorption costing or variable costing to cost units in the Finished Goods inventory account a. Calculate the ending balance in the Finished Goods inventory account under varia ble costing and absorption costing. Ending Balance in Finished Goods Variable costing Absorption costing b. Which costing method is the company using to cost units in the Finished Goods inventory account? Absorption costing Variable costing its stockholders 2. Assume that the company wishes to prepare financial statements for the year to issue a. Is the $60,500 figure for Finished Goods inventory the correct amount to use on these statements for extenal reporting purrposes? Yes, because variable costing is generally accepted for extenal reporting. No, because variable costing is not generally accepted for external reporting. , because absorption costing is generally accepted for external reporting. O No. external reporting because absorption costing is not generally accepted b. At what dollar amount should the 2,750 units be carried in the inventory for external reporting purposes? Finished goods inventory balance for external reporting purposes